ITV share price: reasons to be bullish 

Perhaps the biggest reason for me to remain bullish on ITV is that revenue should rebound over the rest of 2021. Encouragingly, this month’s full-year report included mention of “more positive trends in the advertising market in March and April“. Most of its programmes are also back in production. 

Should all go as planned, I can see ITV restarting dividends. This should be a further catalyst for the shares to keep climbing as income investors pile back in. Additional gains could come from the company re-entering the FTSE 100 only a few months after being forced out. Funds tracking the index will be forced to buy the stock whether they like it or not.  

Another opportunity?

ITV isn’t the only value play out there. Industry peer STV Group (LSE: STVG) could also benefit from an ongoing reversal in sentiment. The shares are already up nearly 70% since the end of August. 

Earlier this month, the small-cap said it had achieved a “better than expected” performance in 2020, even though revenue and pre-tax profits were significantly down on the year. On a more positive note, it said online viewing rose 68% over the period. In other news, STV Studios won a record 19 new commissions in 2020 and net debt, excluding lease liabilities, fell 53% to £17.5m. In addition to all this, its also confirmed that it would reinstate dividends.

The most important snippet for me, however, was that advertising trends were “improving materially” in 2021.

Reasons to be cautious

Although bullish on the ITV share price and STVG’s prospects for the rest of 2021, I’m conscious that owning shares in the former may be skewing my opinion. So, let’s look at a few arguments for why things might not go as I think.

One clear objection to continuing to hold either stock now is that people can’t wait to leave their sofas and venture back out. As such, viewing numbers could drop over the remainder of 2021, especially if we get decent summer weather.

Of course, a third wave of the coronavirus would be bad news too and may halt productions again. A related concern comes from the possibility that overseas travel may still be prohibited. If so, travel companies and airlines will be unwilling to spend on advertising. 

On top of this, the competition for viewers won’t get any easier for ITV. Yes, its Britbox service has been well received, but the number of subscriptions pales in comparison to US giants like Netflix and Disney. As mentioned last month, I’m a big fan of the latter.

Solid hold

I’m happy to continue holding my ITV shares. A forecast P/E ratio of 12 takes into account the above concerns, in my view. Meanwhile, STV trades on an even more attractive valuation of 10.5 times projected FY21 earnings. I’d buy with any spare cash.

As long as COVID-19 is eventually sent packing, I’m hopeful investors like me will be rewarded for not selling either too soon.

The post Why I think the ITV share price is only getting started appeared first on The Motley Fool UK.

More reading

• P/E ratios of less than 10. Are these 3 FTSE value shares hot enough to consider buying now?
• Here’s how a £20,000 Stocks and Shares ISA could one day generate £14,947 of passive income a year
• Here’s how investors can aim for £11,363 a year in passive income from £20,000 in this overlooked FTSE media gem
• Here’s how a 35-year-old putting £15 a day into an ISA could end up earning £18k+ of passive income annually!
• With its 6.5% dividend yield, is ITV a buy for my Stocks and Shares ISA?

Paul Summers owns shares of ITV. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The US business and general aviation market may be crawling rather than rocketing higher, but sales at the flight support services play continue to grow ahead of the broader market. That’s because of the steps it’s taken to improve customer service and build its fixed base operator (FBO) network across the world.

Speaking of which, BBA has shelled out plenty via acquisitions to boost its geographical and operational wingspan, the latest of which in 2018 saw it snap up fuel and fuel-related services provider EPIC to bolster its core Signature FBO division significantly. What’s more, because of its explosive cash generation, the firm’s in great shape to keep investing both organically and through M&A to boost earnings.

Investors assemble

Dividend-seeking bargain hunters should also pay Cineworld Group (LSE: CINE) very close attention today.

As a shareholder of the cinema chain myself, I’ve long celebrated the electrifying impact Hollywood and its packed roster of superhero movies are having on box office takings all over the globe. The appeal of these audiovisual masterpieces was underlined by Imax chief executive Richard Gelfond last week who declared: “With a robust lineup of tentpole films ahead, like the highly-anticipated Avengers: Endgame… we anticipate delivering our strongest box office year ever in 2019.”

Indeed, news that the latest outing for Captain America et al generated $1bn in ticket sales in its opening weekend, the first time such a milestone has ever been achieved, illustrates the immense profits-generating capabilities of such films.

It’s no shock to find City analysts forecasting a 19% earnings rise at Cineworld in 2019 then, a figure that creates a dirt-cheap prospective P/E multiple of 12.5 times. Throw big dividend yields of 4.2% and 4.6% into the bargain and I reckon the FTSE 250 firm is a cracking buy today.

Yields close to 6%

The broader advertising market may be under pressure but this isn’t likely to dent STV Group (LSE: STVG) and its ability to deliver splendid earnings growth, or so say the experts. An 11% bottom-line rise is forecast for 2019.

The broadcaster’s latest trading statement last week certainly gave fresh reason to be optimistic. In it, STV said that total advertising revenues are expected to have risen 1-2% in the first quarter, with a marginal drop in national sales anticipated to have been offset by ripping regional ad sales growth of 20-25% and digital ad growth of 15-20%.

What’s more, a decade’s best viewing performance in 2018 has carried over to the first quarter, the firm said, helped by soaring watching figures on the STV Player platform. It’s why City brokers are predicting a 13% profits rise in 2019, a projection that creates a forward P/E rating of just 8 times. Dividends will also keep climbing through to the end of next year too, resulting in monster yields of 5.6% for 2019 and 5.9% for 2020. I reckon STV is a stock that could help you to make a fortune in the years ahead.

The post 3 value stocks paying BIG dividends that I’d buy today appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Royston Wild owns shares of Cineworld Group. The Motley Fool UK owns shares of and has recommended BBA Aviation. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I think that was an astute judgment, as the share price has been flat in 2018 so far. And I see that as relatively positive, as I wouldn’t have been at all surprised to see a price fall in 2018 as often happens after a big growth stock surges, and when early buyers then go looking for the next big thing.

Since then, forecasts for this year have been uprated, with that early 3% EPS fall replaced by a predicted 5% rise (with a further 5% suggested for 2019).

First-half results released Tuesday provided support for that optimism, with half-time adjusted EPS up 8.1% after revenue climbed by 10.3%. The company lifted its interim dividend by 11% to 1p per share (though the dividend is weighted towards the second half).

Acquisition

Chief executive Chris Sander described it as “another consistently strong performance,” pointing to the company’s strategy of organic growth coupled with “selective acquisitions.” To that end, the firm also announced the acquisition of South West Laundry Ltd, which seems to fit nicely with Johnson’s textile rental business.

Debt is a bit of an issue, but net debt remained reasonably stable at £91.2m, and a net debt-to-adjusted EBITDA ratio of 1.6x is perhaps only a little high at worst. I’m not too troubled by it.

With the full year now expected to come in “slightly ahead of current market expectations,” I see forward P/E multiples of around 14 to 15 as tempting. Progressive dividends add to the attraction, even if they are only yielding around 2% now.

Bigger yield

STV Group (LSE: STV) also revealed first-half figures Tuesday, and after a couple of flat years, it looks like we could be on for renewed EPS growth here too as the firm made the bold claim that its “strategic growth plan gathers momentum.”

The company saw total revenue grow by 6%, with advertising revenue up by the same margin and digital revenue up 24%. STV also enjoyed its best share of viewing figures since 2009, at 18.7%, and was happy to point out that it beat ITV by 10%. Cost savings of £2m to fund new investments are on track too.

The bottom line showed an 8% rise in pre-tax profit, with adjusted EPS up 6%, and that enabled a 20% jump in the interim dividend. But what are the downsides?

Debt?

Well, debt is a bit of an issue here, up 11% to £37.8m. That’s around 1.65 times annualised EBITDA (based on the first-half figure of £11.4m), but again, I don’t see it as too stretching.

With P/E ratios in the 8 to 9 range, we’re looking at a PEG ratio based on 2019 forecasts of 0.6 — which looks attractive from a growth standpoint.

But so far I have neglected what fellow Fool writer Rupert Hargreaves likes best about STV, its dividends. Analysts are forecasting yields of 5% and 5.4% for this year and next, which should be more than twice covered by predicted earnings. And with EPS rises of 7% and 13% suggested, STV looks like a promising candidate for both growth and income to me.

The post Two hot growth stocks I’d buy with £2,000 today appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

For a start, STV’s dividend yield is currently just under 6%, around 2.9% higher than the rest of the market. After several years without a dividend, STV only returned to the ranks of the dividend universe in 2014. Previously, debt repayment had taken priority, but now it looks as if the firm is back on a stable footing.

Debt paydown

At the end of the first half of 2017, net debt had fallen to £34m, around 1.5 times earnings before interest, tax, depreciation and amortisation for the full year. 

Management is now putting an emphasis on shareholder returns. The group announced a 25% increase in its interim dividend at the half year and also went on to reveal a £2m share buyback. For full-year 2017, the proposed distribution is up 13% year-on-year. Going forward management is looking to return around 60% to 80% of the firm’s cash generation after pension deficit funding payments. This implies that STV’s beefy shareholder returns are set to continue for the foreseeable future.

Cash cow 

Retailer Halfords (LSE: HFD) is my second top dividend pick for 2018. Trading at a forward P/E of 11.7 with a dividend yield of 5.2%, the company offers both value and growth.

However, the market is becoming increasingly concerned about the firm’s outlook in today’s hostile retail environment. Over the past five years, pre-tax profit has stagnated as Halfords has tried to stave off the rise of online retailers by discounting and investing more in its store offering. This investment has slashed its operating profit margin from 11.5% to 6.7% for 2017. 

Still, the company continues to throw off cash, and even though margins are under pressure, it does not look as if the dividend is under threat. For the fiscal year to 31 March 2017, Halfords generated cash from operations of £72m compared to a total dividend distribution of £54m. What’s more, the group has a strong balance sheet. Net debt was only £86m at the end of fiscal 2017, 1.2 times annual operating cash flow and a net gearing ratio of 21%. 

With a strong balance sheet behind it and a robust cash flow, City analysts are expecting the dividend to increase by around 3% to 4% over the next few years. 

Retail problems 

My third and final dividend pick for 2018 is Hammerson (LSE: HMSO). Investors have turned their backs on Hammerson recently as it tries to merge with peer Intu. When combined, these two firms will become one of the UK’s biggest property companies with leading shopping centres including London’s Brent Cross, the Birmingham Bullring and Manchester’s Trafford Centre owned by a single company. 

At a time when online shopping is growing rapidly, at the expense of physical retail, investors are questioning the deal’s rationality, although in many ways it does make sense. It’s part of a global consolidation trend and a more substantial firm will be able to generate fatter profit margins thanks to operating synergies while offering better terms to prospective tenants than two smaller groups with less buying power. And analysis also shows it’s the ‘supermalls’ that the combined business will operate that are attracting the best tenants and the most footfall.

I’m positive on the outlook for the enlarged group and think its current 5.5% dividend looks too good to pass up. 

The post My top 3 dividend stocks yielding more than 5% appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Rupert Hargreaves does not own any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

For example, shares in broadcasting giant ITV (LSE: ITV) are currently out of favour with investors, but that doesn’t mean the group’s dividend potential is any less than it was this time last year.

Above-average yield 

Shares in ITV are down by 23% year-to-date excluding dividends, as investors fret about the impact a deteriorating advertising market will have on the group’s earnings. Tech giants Facebook and Google currently dominate the online advertising market, and they are growing every day at the expense of more traditional advertising formats such as television. Advertising giant WPP recently warned on profits thanks to the growing dominance of this duopoly.

Still, even though ITV is facing headwinds, the company remains one of the UK’s premier broadcasters, is highly cash generative and has invested hundreds of millions of pounds in new content as well as its online services. This investment is offsetting some of the declines in advertising revenue. For the first half of the year, total group revenue fell by 3%, but a 6% increase in non-advertising revenue helped cushion the overall decline. For the period, statutory earnings per share declined by 16% as several one off factors impacted results. 

For the full year, City analysts have pencilled in a decrease in earnings per share of 9%, but even after this fall, the company’s dividend yield of 4.9% is set to be covered twice by earnings per share. Net debt at the end of the first half was reported at 1.2 times EBITDA, comfortably below management’s targeted maximum of 1.5 times.

Working closely 

STV (LSE: STVG) is Scotland’s leading media brand, and the company works in close collaboration with ITV, sharing content across the UK. The two companies also share attractive valuations. 

Shares in ITV currently trade at a forward P/E of 10.4 while shares in STV trade as a forward earnings multiple of 9.5. And just like its larger peer, STV offers investors an attractive dividend yield of 4.5%. The payout is covered 2.3 times by earnings per share, leaving plenty of room for further payout growth.

STV is facing similar pressures to ITV, which is why the shares trade at such a low valuation. However, just like ITV, the company is working hard to try and grow in a tight market. Today the company reported that revenue for the first half fell 3% year-on-year and operating profit declined by 16%. Statutory earnings per share of the period declined 24% mainly thanks to a larger pension contribution charge of £1.2m, up from £0.2m in the year ago period.

For the first half of the year, the company’s digital initiatives helped revenue from this division grow by 14%, and it now accounts for nearly 10% of overall group revenue. For the full year, management is targeting digital revenue growth of 15 to 20%. Also, license and trading agreements with ITV as well as BBC provide a “buffer against weakness in the national advertising market” according to the company’s management.

The post Two undervalued 4.5%+ yielders you probably haven’t considered appeared first on The Motley Fool UK.

More reading

• P/E ratios of less than 10. Are these 3 FTSE value shares hot enough to consider buying now?
• Here’s how a £20,000 Stocks and Shares ISA could one day generate £14,947 of passive income a year
• Here’s how investors can aim for £11,363 a year in passive income from £20,000 in this overlooked FTSE media gem
• Here’s how a 35-year-old putting £15 a day into an ISA could end up earning £18k+ of passive income annually!
• With its 6.5% dividend yield, is ITV a buy for my Stocks and Shares ISA?

Rupert Hargreaves owns shares in ITV. The Motley Fool UK owns shares of and has recommended Alphabet (C shares) and Facebook. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. 

Photo-Me

Photo-Me International (LSE: PHTM), a small-cap company which sells and operates a wide range of instant service equipment, offers prospective income investors a dividend yield of 4.3% that is backed up by robust earnings growth.

Growth for the company is underpinned by two key tailwinds. First is the rollout of improved ID security and secured upload technology in France and Ireland, which is set to give Photo-Me booths a boost.

As a leading global operator of self-service photo booths, it is uniquely positioned to benefit from the introduction of these new technology features, because its huge scale means it can spread out the fixed costs of investment over more units.

Second, the company is set to benefit from technology disruption as the expansion of its laundry business continues apace. Photo-Me has recently launched two smaller self-service laundry units. This should help the company increase its presence in the Asia, particularly Japan, which is estimated to be one of the largest worldwide market for laundrettes.

Dividend growth

Shareholders in the company have seen their payouts increase by 180% in the past five years, with a compound annual growth rate (CAGR) of 22.9% in dividends per share since 2012. Indeed, shares in the company reflect its track record on earnings and dividend growth, as they have gained more than 330% over the same period.

Despite these gains, the stock’s valuation seems reasonable. It trades at a forward P/E of 16.7, based on City forecasts that this year’s earnings will rise 6% to 9.8p a share. And looking further ahead, analysts expect its earnings to climb another 6% next year, which means its forward P/E, based on its 2018 expected earnings, would fall to just 15.6.

That said, forecast growth is still a far cry from its 20%-plus rates seen recently by the company, and this explains why its forward P/E has fallen from its three-year historical average of 20.8.

STV

Another under-appreciated winner of the past few years is STV Group (LSE: STVG). Shares of the firm are up 316% over the past five years as the Scottish media company has delivered an impressive turnaround in its financial performance.

As TV audience numbers decline, because of fragmentation in the market and the rise of online media consumption, STV is doing well in its shift away from dependence on broadcast. Last year, revenue rose 3% to £120.4m, although operating profit still declined by 3% to £19.7m.

However, digital revenues rose by 20% to £7.9m, with the margin for the segment continuing to grow above its target level of 52%. And thanks to strong cash flow, dividends were raised by 50% to 15p a share, which gives STV a tempting dividend yield of 3.9%.

Looking ahead, City analysts expect more growth to come, as STV is forecast to raise dividends by 13% this year, with a further increase of 9% in 2018.

The post 2 dividend growth stocks for shrewd investors appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Upbeat performance

The stock in question is digital media specialist STV (LSE: STVG). It recorded a rise in digital revenues of 20% and a digital margin which has continued to grow above its target level at 52%. Furthermore, its 2016 results showed that its Consumer Division’s margin is at an 11-year high of 18.5% despite a 4% decline in national revenues. This was aided by a resilient core business which has been able to successfully build reach and engagement through the STV Family of consumer services.

The company’s STV Productions division returned to revenue growth in 2016, with it rising by 53% to £12.7m. It plans to launch an innovative second TV network service in spring 2017, with STV2 expected to increase the reach of the STV Family of consumer services. It will also seek to de-risk the business through the agreement of a long-term Airtime Sales Agreement with ITV (LSE: ITV). This covers the sale of national airtime and sponsorship, which appears to be a positive development for STV.

Dividend potential

The company’s results also included details of the acceleration of its progressive dividend policy, which reflects the board’s confidence in the financial strength of the business. It will aim to pay out between 60% and 80% of cash generation after pension deficit funding. This means that dividends have risen by 50% in 2016, which puts STV on a yield of 4.1%. And since the company is expected to record a rise in its earnings of 4% this year and 11% next year, the prospect of an inflation-beating dividend rise is relatively high.

Sector opportunity

Of course, other stocks in the media sector also have impressive income prospects. For example, ITV currently yields 3.9% from a dividend which is covered 2.1 times by profit. This indicates that there is scope for dividends to rise at a faster pace than profit, while the addition of special dividends also enhances the company’s income attraction.

Certainly, ITV faces a somewhat uncertain future. Advertising revenue in the UK could come under pressure if Brexit causes an economic slowdown. However, the company’s most recent results showed that it has a sound balance sheet, impressive cash flow and a strategy through which to overcome potential difficulties in trading conditions. Therefore, ITV seems to be a strong income stock for the long term, while its smaller sector peer STV may prove to be an increasingly impressive income share to own in the coming years.

The post Why has this small-cap stock been overlooked by dividend investors despite 4.1% yield? appeared first on The Motley Fool UK.

More reading

• P/E ratios of less than 10. Are these 3 FTSE value shares hot enough to consider buying now?
• Here’s how a £20,000 Stocks and Shares ISA could one day generate £14,947 of passive income a year
• Here’s how investors can aim for £11,363 a year in passive income from £20,000 in this overlooked FTSE media gem
• Here’s how a 35-year-old putting £15 a day into an ISA could end up earning £18k+ of passive income annually!
• With its 6.5% dividend yield, is ITV a buy for my Stocks and Shares ISA?

Peter Stephens owns shares of ITV. The Motley Fool UK has recommended ITV. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

To be fair to Camellia, full-year results announced today did show the very diversified group moving from a £3.1m loss last year to a £4.9m pre-tax profit over the past 12 months.

However, the chairman summed up my hesitancy about Camellia’s future when he warned today that “the outlook for the group continues to be mixed.” Mixed is exactly the word I’d choose when the company has to fret about drought in South Africa affecting its agriculture business, lower UK interest rates affecting banking operations and the Brexit vote lowering demand for engineering services.

There are many good reasons conglomerates have gone out of favour with investors and despite turning a profit this year, I’ll be steering clear of Camellia and its varied interests.

Housebuilder to watch?

Given the spectacular collapse of the Irish housing market during the Financial Crisis investors would be forgiven for not wanting to touch the sector with a 10-foot barge pole. The latest results from Irish homebuilder Cairn (LSE: CRN) suggest it may be time to take a closer look, though.

Interim results for Cairn showed the company making good progress in transitioning from acquiring development sites to the second phase of actually building homes. After last year’s IPO and a recent rights issue the company has access to  €167m of cash and debt to see it through the construction process.

Most importantly, the housing market in Ireland isn’t what it was before the Crisis. Instead of building vast suburbs far away from population centres to take advantage of tax breaks, as was done in the boom years, Cairn is focusing 90% of its projects on Dublin, where there’s a severe shortage of quality housing. It’s still early days for Cairn, with only 112 homes sold so far, but I’ll be watching closely in the coming quarters to gauge how completions are progressing and whether margin targets can be maintained.

Wait and see

It was all good news today for Scottish TV channel STV (LSE: STV) with interim results showing revenue up 5%, operating profits up 28% and net debt down a full 17% year-on-year. That said, a fair bit of this success can be placed at the feet of improved productions from ITV, where STV sources the content it doesn’t produce itself.

With the future of terrestrial TV looking increasingly bleak, STV is attempting to increase the percentage of revenue coming from in-house productions and digital sales. Over the past six months these businesses did increase revenue by 100% and 50% respectively but together still only account for 12% of group revenue.

These divisions will be critical in order to secure success in a future where ad revenues are likely to decrease and owning quality content will be king. With shares trading at a relatively tame 8.5 times forward earnings and a 2.8% yield on offer, I’ll keep watching STV to see how these two business lines progress but wouldn’t take the plunge just yet.

The post 3 top under-the-radar mid-caps to buy on today’s results? appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Ian Pierce has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The company is Scotland’s leading digital media brand with programmes going out to around 3.6m viewers per month along with what the company describes as the most comprehensive local news service in the UK. 

Diversified income

The firm’s chief executive says: “Our investments and focus have put us in a strong position to deliver organic growth in the future and the increasing diversity of earnings improves the security of returns for our investors.”

On the subject of diversity, the results show that 22% of the company’s earnings came from non-broadcast revenues during 2015, a figure that has grown from the 11% achieved in 2011. To mark these good results, the directors hiked the dividend by a healthy 25%, which is a great result for the firm’s existing investors.

At today’s share price of 422p, the forward price-to-earnings (P/E) ratio runs at just under 10. Meanwhile, there’s a 2.8% forward dividend yield with the payout covered a decent 3.6 times. City analysts following the firm expect earnings to expand by 8% during 2016 followed by a further 10% increase in 2017.

Borrowings seem under control with net debt running at around 1.5 times the level of annual operating profit, and falling. So STV Group looks like a growing business trading at a reasonable price although there’s a lot of cyclicality in the firm’s business model due to reliance on advertising revenues. That said, the firm is trading well and growing now, so perhaps I should buy some of the firm’s shares.

Disappointing results

Alternative investment products provider and hedge fund manager Man Group (LSE: EMG) delivered a disappointing set of full-year results today. Net revenues are down 0.5% for the year and adjusted profit before tax sank 17%. The problem seems to boil down to an 11% fall in performance fees revenue — even hedge funds are finding these markets difficult to trade!

The firm’s chief executive says: “Looking forward, the on-going volatility in the markets in which we operate remains very challenging and, accordingly, the risk appetite of our clients might impact flows. However, we now have a more diversified offering and a range of attractive options for growth, which have strengthened the firm and enhanced our resilience as a business.”

Although funds under management rose around 8% for the year, delivering a 6% boost to net management fee revenue, there’s a clear risk that this improvement could reverse. If that happens alongside continuing poor fund performance, there could be a double whammy that takes profits and the share price lower.

I’m avoiding Man Group shares because of that risk, and because the firm’s operations lack visibilty. I’d rather invest on my own behalf than have my investing outcomes dependent on the actions of other traders, as I would by investing in Man Group.

The post Should I Invest In STV Group Plc Or Man Group PLC On Today’s Results? appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In case you don’t know, Mark Slater is Jim Slater’s son and he’s just as savvy as his father.  Jim Slater’s Zulu Principle method of stock picking is no doubt an influence. But Mark Slater has built up a robust investment record on his own account over several years, through his fund managing investment business Slater Investments Ltd.

A capital-light business model

Alliance Pharma aims to acquire, license and distribute pharmaceutical and healthcare products. The firm reckons it looks for underlying sales stability and growth potential before making an acquisition and has 30 such deals under its belt since 1998.

A big part of the company’s strategy is to outsource capital-intensive activities such as manufacturing, warehousing and logistics to what the firm describes as ‘class-leading’ specialists. Alliance Pharma then distributes its products through wholesalers, retail pharmacies, hospitals and an international network of distributors.

That strikes me as a potentially efficient business model, and Alliance Pharma has a record of profits over the last few years, although the rate of profit growth has been a bit lumpy.

At today’s share price of 49p, Alliance Pharma trades on a forward price-to-earnings (P/E) multiple of just under 14 for 2016 and has a forward dividend yield of 2.5%.

A growing media empire

STV Group describes itself as Scotland’s leading digital media brand. The firm reckons its programmes reach 3.6m viewers each month. They include shows such as Emmerdale, Coronation Street, The X Factor, Britain’s Got Talent and Antiques Road Trip, alongside what the company claims is the most comprehensive local news service in the UK. 

STV says its production arm has ambitious plans for domestic and international growth. Earnings have been climbing steadily over the last few years, and at today’s 505p share price the forward P/E rating runs at around 11.5 for 2016. Meanwhile, there’s a forward dividend yield on offer of 2.4 % or so, with the payout covered around 1.8 times by City analysts’ estimate of forward earnings.   

If STV can realise the potential of its expansion hopes, the present valuation seems reasonable.

Energising growth
                  
Inspired Energy describes itself as one of the largest energy consultants in the UK. The firm provides a range of energy advisory services and intelligent energy solutions to the industrial and commercial sector. Operations include buying strategies, market intelligence, negotiation and contract management solutions, all developed according to client-specific needs, the firm says. That sees the company involved in energy procurement, market analysis, historical audits, energy management, bureau services and renewable energy projects.

Business has been brisk and the firm sports an impressive record of earnings’ growth over the last five years or so. Today, with the shares at 13.75p, Inspired Energy trades on a forward P/E ratio of just over 12 for 2016 and promises a 2.5% dividend yield. Forward earnings look set to cover the payout a healthy 3.2 times, suggesting the directors see plenty of potential for further expansion from here.

The post 3 Promising Mark Slater Picks: Alliance Pharma plc, STV Group Plc And Inspired Energy PLC appeared first on The Motley Fool UK.

More reading

• Fancy turning £20k into £129,207? Consider these FTSE 100 stocks to buy
• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up

Kevin Godbold owns shares in Inspired Energy. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.