5 Opportunities For The Week Ahead

Published in Investing on 21 September 2012

Next week we have a mix of final and interim results, with some tempting pre-close updates, too...

We should have a small number of full-year results next week, together with more in the current season of interims, and a few trading updates. Among them, there are sure to be some good long-term investment opportunities.

So, as usual, here are five that I've been having a look at, and which you might care to investigate a bit further before the results are out...

QinetiQ

We should have a pre-close trading update from aerospace and defence technology specialist QinetiQ (LSE: QQ) on Monday, ahead of interim results due in November. And I think engineering and defence companies are well worth a look these days, having suffered during the economic downturn.

Earnings per share figures have slumped over the past three years, and the dividend was stopped in 2011. But forecasts for the year to March 2013 suggest a return to pre-crash levels, with round 15p per share being forecast -- today's price of 174p turns that into a price-to-earnings (P/E) ratio of under 12. The recovery in the dividend is expected to continue this year and next, too, though there's only around 2% on the cards as yet.

Still, it's a recovering industry, and it seems like a good time for investors to give it some scrutiny.

CVS Group

CVS Group (LSE: CVSG) will report its annual results on Tuesday, and I think it's worth investigating for a number of reasons. Firstly, its share price has gained around 50% over the past 12 months to stand at 142p today, and that's usually a sign of something good. And secondly, it's a quoted veterinary services provider, and there are precious few of those, in a very profitable business that should surely have a good long-term future.

Back in July, CVS told us that full-year results should be in line with expectations, so we should be hearing of earnings of around 14p per share, putting the company currently on a P/E of 10 -- and 2013 forecasts have that falling to under 9. There's not a much in the way of dividends yet, but CVS is a growing company.

We do need to watch out for debt, but at the interim stage it was falling, and was down to £31.6m. We should hopefully see further reduction.

Close Brothers

Tuesday also brings us full-year results from financial services provider Close Brothers Group (LSE: CBG), and a much stronger year is forecast this year than last. The City is expecting a dividend of 5% from the 844p shares, and at the time of its last trading statement in July, things sounded like they were going according to plan with a "a solid performance for the year" expected -- so we can probably be fairly confident of that payout.

But the statement did also say that "in Securities, difficult market conditions continue to affect Winterflood", so we should look for news of potential improvements in that division.

IQE

On Wednesday it will be the turn of semiconductor wafer products specialist IQE (LSE: IQE) to reveal interim results, and after July's Trading statement, we shouldn't be in for any shocks. The firm is expecting to report around £34m in first-half revenues and to extract EBITDA of about £4m from that. Net debt is forecast to come in around £8m, and the board said they were confident about meeting full year expectations.

With the shares trading at 26.5p, current forecasts suggest a P/E of around 17, which is a bit above the market average of around 14. But this is a small growth company with a market cap of only £160m, so it could look cheap from that perspective. In fact, 2013 forecasts suggest a 50% growth in earnings, bring the P/E down to 11, and we should be on for the start of dividend payments.

This looks like a high-tech possibility to me.

TUI Travel

Thursday will bring us a pre-close trading update from TUI Travel (LSE: TT) before the company releases full-year results for the year ending 30 September. Results for the third quarter, released on 8 August, told us of operating profit for the quarter falling by 16% to £74m. But that's not too bad, considering the tough economic times we're in, and there was encouraging news of rising bookings this summer.

TUI has fared quite a bit better than some rivals, like Thomas Cook Group (LSE: TCG) which nearly went to the wall and is still saddled with very large amounts of debt. By comparison, TUI's forecast 5% dividend looks good, with the 232p shares on a prospective P/E of only 10. They say that hard times sort of the strong from the weak, and TUI is looking like one of the strong ones to me.

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> Alan does not own any shares mentioned in this article.

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