Here's Why Glencore plc, Next plc and Virgin Money Holdings (UK) plc could be shares to buy now!
Shares in mining giant Glencore(LSE: GLEN) have staged a decent recovery this year, having more than doubled since their January low. But today they've fallen back a bit, down 3% to 145p, after the company's first-quarter production report revealed a fall in output of some key commodities.
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It shouldn't have come as a surprise as Glencore announced late last year that it was cutting production of copper, zinc, lead, coal and oil in response to low prices -- copper output was down 4% on the first quarter of 2015, with zinc down 28% and coal down 17%. But full year guidance remains largely unchanged, with the exception of a 0.3m bbl drop in oil due to reduced exploratory drilling. So are Glencore shares good value now?
With great progress made in debt reduction, commodities prices on the up again, and a return to strong earnings growth on the cards, I think the future is solid -- even if Glencore shares are on a short-term high P/E.
Fashion boost
Next(LSE: NXT) shareholders, meanwhile, woke to sunnier news and to see their shares up 4% to 5,180p, despite the clothing chain reporting a 0.2% drop in sales between 31 January and 2 May (and a 0.9% drop in full-price sales). That 's at the lower end of the firm's full-year sales guidance of -1% to +4% -- and the company responded by lowering and widening it to a range of -3.5% to +3.5%, with pre-tax profit of between £748m and £852m indicated.
The increasing shift from in-store sales to online sales is also apparent, with full-price Next Retail sales down 4.7% in the period while Next Directory sales climbed by 4.2%.
Even with the small sales fall, the cash just keeps flowing -- Next expects to generate £350m of surplus cash in the current year, and has already returned £181m through share buybacks and a special dividend.
Next shares are down 31% so far this year and on a forward P/E of 11, dropping to 10.6 on January 2018 forecasts, and for such a well-managed company that looks like a long-term bargain to me.
Banking upstart
Virgin Money(LSE: VM) shares spiked when the markets opened, but at the time of writing they're down 2.2% to 346.5p, even though first-quarter mortgage lending came in 30% higher than a year ago, at £2.1bn.
With the bank having just a 3.4% share of the UK's mortgage lending so far and the Virgin brand seen as a trustworthy one, there's clearly significantly more scope for expansion than the bigger lenders and we could be in a golden age for the country's challenger banks. Chief executive Jayne-Anne Gadhia was "delighted to report it has been another excellent quarter for Virgin Money," and I can understand her enthusiasm.
The share price has been erratic, but since 20 January we've seen a 29% rise, and strong EPS growth forecasts suggest a P/E dropping as low as 8.5 by the end of 2017. Virgin Money shares could definitely be worth a punt.
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Alan Oscroft 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.
