Are Globo Plc And Findel plc Set To Double Or Halve In Value?

Here’s why this Fool would choose Globo Plc (LON:GBO) over Findel plc (LON:FDL).

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.

That was quick!

You’d have recorded a 35% pre-tax gain if you had followed my advice to consider Globo (LSE: GBO) at 28p a share on 16 September — a “top pick“, as I described it.

The obvious question now is whether its shareholders will enjoy a true value story, or if rapidly rising returns are destined to fade away — let’s delve into its interim results, which were released today. 

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Strength

Globo’s stock price has risen 8.2%, to 38p, so far today — and rightly so, in the wake of a solid trading update.

Recent news about its strategy also bodes well for long-term value. 

Strength is in the numbers, and although its growth rate for net income per share is lower than that of other key metrics and may point to a risky investment, you should pay attention to a few other details at this stage of maturity for this tech business. In fact, its most relevant financial metrics indicate that the group is on the right pattern of growth, driven by mobile. 

Its interim results for the years ended on 30 June showed: 

  • Revenue up 56% to €72.4m (1H14: €46.5m);
  • A 55% rise in EBITDA to €34.2 (1H14: €22m);
  • Last twelve months EBITDA at €63.1m;
  • Pre-tax profit up 37% to €22 (1H14: €16.1m);
  • Net operating cash up €21m (1H14: €16.6m);
  • Net cash increased to €47.4m (31 December 2014: €40.4m).

Based on the value of its current assets, its price-to-tangible book value, cash flow and earnings multiples, I don’t see why Globo could not double to 74p, or at least trade closer to its 52-week high of 64p over time.

While it’s true that its lowly earnings per share (EPS increased 14% to €0.049 versus €0.043 in 1H14) could get lower following the issuance of its upcoming high-yield bond, your focus over the next four to six quarters ought to be on its revenues and core cash flow profile, both of which in my view suggest that Globo deserves a valuation some 15p to 25p higher, based on fundamentals. 

Better Value Elsewhere? 

Elsewhere, Findel (LSE: FDL) rose over 15% in early trade today as it emerged that Sports Direct had acquired a stake of almost 19% in the retailer. Strategically, I am not sure this is a great deal for the buyer, although the valuation of Findel is attractive based on earnings and cash flow multiples. 

Findel also said that since completing the strategic review of its sports retailing business, Kitbag, it had “subsequently received an approach for the business from a third party and has agreed terms subject to contract,” adding “However, there can be no certainty that a deal will be reached.

Its shares look fully priced to me right now. 

Today’s rise to 230p appears obvious, as investors bet on deeper ties between Sports Direct and Findel from now on, but aside from that single element, I really struggle to be bullish about a business that is not expected to grow at a particularly fast pace, whose underlying core margins could come under more pressure and whose balance sheet is not particularly strong, to put it mildly. 

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.

Alessandro Pasetti 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.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Here’s how a £20k ISA could generate £1k of passive income each month!

Christopher Ruane looks at how an investor could earn a four-figure monthly passive income from buying high-quality dividend shares.

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

How much might an investor need to invest in dividend stocks to earn £800 a month passive income?

Mark Hartley attempts to break down the complexity of building a lucrative passive income from dividends and considers some strategic…

Read more »

Investing Articles

Just released: March’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Investing Articles

At a P/E multiple of 6, is this FTSE 100 stock a no-brainer buy to consider in April?

With shares trading at a low earnings multiple and profits expected to grow 75% over the next three years, is…

Read more »

Front view of a mixed-race couple walking past a shop window and looking in.
Investing Articles

I think this struggling FTSE 250 discount retailer could skyrocket in 2025

Our writer considers the recovery potential of a FTSE 250 dividend stock that has lost significant value over the past…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

How an investor could open a Stocks & Shares ISA before 5 April, and aim for millionaire status

If an investor doesn’t use their Stocks and Shares ISA allowance before 5 April, it’s gone. Dr James Fox explains…

Read more »

Investing Articles

3 things I’m doing ahead of the new 2025-26 ISA year

Ben McPoland looks back on strategies for his Stocks and Shares ISA portfolio that didn't work out well in the…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

1 big mistake to avoid in a falling stock market

A stock market downturn can be a great time to buy shares. But getting fixated on prices that were once…

Read more »