Is SSP Group PLC A Better Buy Than Tesco PLC And WH Smith Plc?

Should you buy shares in food outlet company, SSP Group PLC (LON: SSPG), ahead of Tesco PLC (LON: TSCO) and WH Smith Plc (LON: SMWH)?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today’s news release from food outlet company SSP Group (LSE: SSPG), is very positive and shows that the company is moving in the right direction. That’s because SSP has agreed to purchase 32 outlets in Germany from Heberer for £5m. The outlets sell bakery and other food products in travel locations across Germany, with 30 being located in railway stations and 2 being in airports, and their purchase considerably increases SSP’s exposure to travel locations across Germany.

And, with the value of the gross assets that will be acquired being around £5m and having generated profit of £1m last year, SSP seems to be getting a good deal with regard to the purchase price.

Clearly, 2015 is set to be a pivotal year for SSP, with its bottom line expected to move from being in the red to being in the black. As such, it would be of little surprise for investor sentiment to improve should the company be able to deliver on its current guidance. Furthermore, with earnings set to grow by 14% next year, now could be a good time to buy a slice of the business – especially since its shares trade on a price to earnings growth (PEG) ratio of just 1.6.

Should you invest £1,000 in Ig Group Holdings right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ig Group Holdings made the list?

See the 6 stocks

Undoubtedly, the sale of food and other items at railway stations and airports is a hugely lucrative business. That’s mainly because there is a lack of competition and, with people unable to wander too far from a station or airport, it means that outlets in those locations are able to charge higher prices and generate higher margins than they otherwise would be able to.

This business model has, of course, been utilised exceptionally well by WH Smith (LSE: SMWH). It has posted increasing profitability in each of the last five years and, looking ahead, is expected to deliver an increase in earnings of 10% this year and 9% next year. Furthermore, like SSP, it appears to offer good value for money, with its shares trading on a PEG ratio of 1.9. Although this is higher than SSP’s PEG ratio, WH Smith has a much better track record of profitability and, as a result, offers less risk. This makes it a more appealing option than its smaller peer.

Meanwhile, Tesco (LSE: TSCO) may not have the enviable locations of either SSP or WH Smith. However, it does have huge turnaround potential, with the refreshed strategy being adopted by its new management team having the potential to make Tesco a far more profitable business. For example, Tesco is selling fewer products at lower prices so as to create a more efficient business model and encourage higher turnover, while a focus on convenience stores and online rather than superstores is also likely to improve the company’s long term outlook.

In the nearer term, Tesco also has vast potential. For example, it is forecast to return to bottom line growth next year following four years of decline and, even though its shares have risen by 15% since the turn of the year, they still offer excellent value for money as evidenced by a PEG ratio of just 0.5. So, while SSP and WH Smith appear to be worth buying, Tesco seems to be the preferred option at the present time.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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

More on Investing Articles

Two business people sitting at cafe working on new project using laptop. Young businesswoman taking notes and businessman working on laptop computer.
Investing Articles

£10,000 invested in the FTSE 100 at the start of 2025 is now worth…

The FTSE 100 has bounced back from April’s tariff sell-off. Roland Head crunches the numbers and highlights a stock to…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

Up 20% with a 9% yield! This stock remains my top passive income earner

When it comes to earning passive income through dividend investing, this major FTSE 100 insurer is the undeniable winner in…

Read more »

4 Teslas in a parking lot at a charger station
Investing Articles

Tesla vs Ferrari: which stock is leading the race in 2025?

This writer digs into the Q1 numbers to see whether his decision to choose Ferrari over Tesla stock has been…

Read more »

Businessman with tablet, waiting at the train station platform
Investing Articles

Here’s the growth forecasts for Next shares through to 2028!

Next's shares have risen in price again after another forecast-raising trading statement. Is the FTSE 100 company a white hot…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Up 145%, this investment trust has a P/E ratio of 10. Is it still a bargain?

The long-term track record of this investment trust has been excellent. Our writer thinks it could still be a bargain…

Read more »

Bournemouth at night with a fireworks display from the pier
Investing Articles

These 3 dividend shares are on fire but they’re still dirt-cheap and pay piles of income!

Harvey Jones is hugely impressed by 3 FTSE 100 dividend shares that have managed to deliver on two key fronts,…

Read more »

DIVIDEND YIELD text written on a notebook with chart
Investing Articles

9% yield! Is this one of the best dividend stocks to consider buying right now?

With signs the worst for it might be over, dividend investors should add B&M European Value to their lists of…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Down 26% in 3 months! What’s going on with the Alphabet share price?

Stock market investors sold off Alphabet (NASDAQ:GOOG) shares heavily yesterday. Is this a worry or a timely buying opportunity to…

Read more »