Shares in price comparison website Moneysupermarket.Com (LSE: MONY) and wealth manager Henderson (LSE: HGG) are up modestly today after both companies posted encouraging results.
In the case of Moneysupermarket.Com, the key takeaway is that it expects full year profitability to be slightly ahead of previous guidance, with a strong first half of the year delivering increased profitability. In fact, Moneysupermarket.Com delivered a rise in net profit of £9m, with it reaching £30m in the first half of the year versus £21m in the same period last year. As such, its shares are up around 1.5% at the time of writing.
Meanwhile, Henderson saw its assets under management rise by 10% versus the first half of 2014, with net inflows of £5.6bn being a major positive for the company. And, with its underlying pretax profit from continuing operations soaring to £117m from £90m in the first half of last year, it appears to be moving in the right direction. As such, a £25m share buyback is to be initiated in the second half of the current year, with Henderson’s shares now trading 27% higher than they were at the turn of the year.
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Despite their encouraging financial performance, though, there are a number of stocks that I would purchase before Moneysupermarket.Com and Henderson. In the case of Moneysupermarket.Com, the reason for that is the company’s valuation. Certainly, today’s improved guidance is highly encouraging for investors and shows that, while saving money may not be quite as important to individuals as it was a year ago (due to increasing incomes in real-terms), it is still able to increase profit at a brisk pace. However, this already seems to be more than adequately accounted for by the company’s valuation, with it trading on a very high price to earnings growth (PEG) ratio of 2.9.
Of course, Henderson offers excellent value for money at the present time. It trades on a PEG ratio of just 0.9 and, with management appearing to have considerable confidence in the company’s future prospects (as evidenced by the initiation of a share buyback programme), now could be a great time to buy a slice of it. That’s especially the case since Henderson is expected to yield as much as 4.1% next year.
However, even though Henderson is appealing, Barclays (LSE: BARC) is much more attractive at the present time. For starters, it is incredibly cheap despite having an excellent track record of profitability – especially when it is considered just how challenging recent years have been for the banking sector. For example, Barclays has been profitable throughout the credit crunch and even though it is due to deliver double-digit earnings growth in each of the next two years, it trades on a PEG ratio of just 0.5. This indicates that its shares are hugely undervalued and offer superb capital gain potential.
Looking ahead, Barclays may be without a permanent CEO for some time. However, it has a strong management team and, as such, investor sentiment is unlikely to be hurt by this fact. And, with Barclays set to yield as much as 3.7% next year, it is quickly becoming a very appealing income stock that is set to deliver stunning total returns in the long run.
