Three great bargains after today’s news?

Do Friday’s updates offer tempting opportunities?

| 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.

As the hot summer weather continues, so does the stream of company updates, including some interesting-looking investment candidates. Here are three possibilities from today’s crop.

Top name in self storage

Shares in Big Yellow Group (LSE: BYG) have fallen by 19% since their 2016 peak in May, to 718p as I write. That’s despite full-year results looking very impressive, but it looks to me like it was a justified correction for shares that were getting a little overheated.

A first-quarter update today suggested things are still moving in the right direction for the self storage specialist, with storage area and occupancy both increasing, and revenue up 10% on the same quarter last year (8% like-for-like). Net rent per unit area is also improving. Chief executive James Gibson declined to forecast any effects of the Brexit referendum, but Big Yellow’s business is 100% in the UK and doesn’t look to be at risk.

The only thing that concerns me is that the shares still look a bit highly valued, on a forward P/E of 20 with EPS growth of 11% forecast. The multiple does drop to 18 on march 2018 forecasts and dividend yields of around 4% are attractive, but we could see the share price faltering if and when growth slows.

Safe insurance

If you’re looking for safety in the insurance market in these early Brexit days, it’s hard to beat a Lloyds of London insurer. And today, Beazley (LSE: BEZ) released half-time results that looked pretty solid. Pre-tax profit dipped slightly to $150.2m, but gross written premiums rose by 2% to $1,124m and net investment income grew from $43.5m a year ago to $62.7m.

Chief executive Andrew Horton put the firm’s success down to its US business continuing to grow strongly, and to its ability to attract “talented underwriters with entrepreneurial flair” after adding 36 newcomers to the pool.

Should we buy the 393p shares? Well, there’s a 19% fall in EPS forecast for this year with a further 2% drop pencilled-in for 2017, and this year’s predicted 5.6% dividend yield would drop to 4.2%. But with the shares valued at 13 times earnings, they still look like reasonable long-term value to me.

Efficiency in gold

I confess I’m not a big fan of gold or of gold miners, as it’s a market that’s entirely dependent on the fickleness of sentiment. But one thing I do like about Acacia Mining (LSE: ACA) is its low cost of production. According to first-half results released today, Acacia enjoys a cash cost of $595 per ounce, 23% less than a year previously, with the shiny stuff selling for $1,330 today. But against that, the company’s all-in sustaining cost stands at $926 per ounce, and its profits are highly geared on the retail price.

Gold production in the second quarter came in 19% higher than last year, and the firm is expanding its exploratory activity across Africa at what it says is low cost.

The shares are up 8.5% to 565p on the day as I write, and have soared by 53% since Brexit referendum day on 23 June, so is Acacia a share worth buying? I still see gold as an investment for short termers, and it’s definitely not one for me.

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.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Beazley. 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

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »

Investing Articles

Billionaire Warren Buffett just bought shares of Domino’s Pizza. Should I grab a slice?

Our writer takes a look at a few reasons why Domino's Pizza stock might have appealed to Warren Buffett's Berkshire…

Read more »