Now though, the company offers what appears to be a low valuation. As such, it could be worth buying alongside another share which reported encouraging results on Monday. Both shares could outperform the FTSE 100 in the long run.

In-line performance

Reporting upbeat results on Monday was supplier of integrated training and support solutions to the defence and regulated civilian sectors, Pennant International (LSE: PEN). The company is performing in line with expectations, recording a more-than 100% rise in pre-tax profit to £2.03m. It’s been able to successfully rescope a key contract with a major UK prime contractor during the first half of the year, while also delivering all remaining training aids on Middle East contracts that were signed in 2016.

Looking ahead, the company’s contracted order book of £31m, scheduled for delivery over the next three years, suggests that it has a bright future. It also has a pipeline of potential opportunities that are valued at over £100m in aggregate.

With Pennant International currently trading on a price-to-earnings growth (PEG) ratio of 0.1, it seems to offer good value for money. With net cash of £3m, and what seems to be a solid growth strategy, its share price performance could improve over the medium term.

Volatile prospects?

As mentioned, the Royal Mail share price has disappointed in recent months. The company’s financial outlook is unlikely to cause a sudden improvement in investor sentiment, with it due to report a fall in earnings of 14% in the current year. While a return to growth is forecast for 2019, the company’s bottom line is expected to increase by just 1% versus the current year. This suggests the challenges that have held back its performance in recent years are set to continue.

With the majority of Royal Mail’s revenue being generated in the UK, political uncertainty remains a key risk facing the business. Although cost avoidance measures are helping to make the UK operations more efficient, volumes are likely to remain under pressure. This could cause a further decline in the company’s financial performance in the near term.

In the long run though, a pivot towards international markets could take place under the new CEO. This could be done through a mix of organic growth and acquisitions, with the prospects for international markets much stronger than the UK, according to the company’s recent update. As such, and with the stock now having a price-to-earnings (P/E) ratio of 14 following its recent decline, now could be the right time to buy it ahead of what may prove to be a period of improved performance.

The post Here’s why FTSE 100-member Royal Mail’s share price could be set for a rebound appeared first on The Motley Fool UK.

Halosource

Water filtration play Halosource (LSE: HALO) has extended its rotten run of form in end-of-week trade and was recently dealing 26% lower from Thursday’s close around 8.75p per share.

A range of operational problems mean the business is now trading at a mere fraction of its 166p price seen five years ago, and although share values had picked up during the past year, a series of poor updates in recent weeks has eradicated all of these gains. Halosource is now dealing at levels not seen since last September.

Halosource set the ball rolling in November when it advised that product rollout delays by key customers, along with capacity expansion issues in China — problems that will dent its ability to meet client orders — will cause revenues in 2015 to fall “materially lower than market expectations.”

And investors headed for the doors again today after Halosource advised that, while its Chinese facility was now back up and running, that further orders delays are expected. Indeed, all of these orders may not be able to be met until the first quarter of 2016, it noted, and total sales are now expected to register at $18m-$19m this year versus $21m in 2014.

With net losses also expected to be subsequently higher than forecast, and net cash expected to stand at $4m at the end of the year, Halosource advised that it is “exploring opportunities to strengthen its balance sheet and improve cash generation.”

 There is no doubting that surging demand for clean water in emerging markets provides terrific growth opportunities for the likes of Halosource. But with the US-based business facing a murky near-term sales outlook, as well as potentially-drastic action to mend its battered finances, I believe the firm is a risk too far at the current time.

Pennant International Group

Defence specialists Pennant International (LSE: PEN) also shocked the market with a disappointing update in Friday business, and the stock was subsequently dealing 14% lower from the prior close.

The Cheltenham-based firm, which supplies products and services to the defence, rail, naval and aerospace segments, advised that it had only signed off on one of two critical contracts for 2015.

As a result Pennant International now expects “the loss for the second half… to be significantly greater than that reported in the first half.” This year’s sales expectations were based on total contracts worth £15m being rubber-stamped.

 In more encouraging news, Pennant International advised that a strong order book for 2016 and 2017 should deliver underlying revenues of £10.2m for each of these years, exceeding expected sales for the current period.

 But should Pennant International experience further contract delays — a common theme in the company’s core markets — shares could be in for a further battering looking ahead. Like Halosource, I reckon Pennant International carries too much risk at present.

The post Should You Follow Heavy Selling At Halosource Inc & Pennant International Group plc? appeared first on The Motley Fool UK.