Is it time to pile into Gulf Keystone Petroleum Limited, SSE plc and Patisserie Holdings plc?
SSE(LSE: SSE) remains a superb dividend stock, with today's full-year results showing that it has met its target of raising shareholder payouts by at least as much as inflation. They've increased by 1.1% and with dividends being covered 1.34 times by profit, SSE's dividend growth outlook remains healthy. This could cause investor sentiment towards the company to improve if, as expected, interest rates remain low in the coming years.
Although SSE's earnings fell by 3.7% last year, they're still higher than expectations and with it targeting a return to growth in the current financial year, its share price could rise. That's especially the case since it trades on a price-to-earnings (P/E) ratio of only 13.6 and with a yield of 5.9%, SSE remains one of the higher yielding stocks in the FTSE 100. And due to it having a beta of 0.8, it could become increasingly popular among investors if market volatility remains high.
Also reporting today was Patisserie Holdings(LSE: CAKE). The owner of Patisserie Valerie reported a 20% rise in pre-tax profit in its half-year results, with it being able to deliver sales growth of 14% in a competitive trading environment. This has allowed Patisserie Holdings to pay a maiden interim dividend of 1p per share, which provides evidence of its confidence in the long-term growth prospects for the business.
With Patisserie Holdings maintaining a net cash position of £8.9m, it seems to be financially sound and has the financial firepower to open more stores following its 12 new sites opened in the first half of the year. New openings are likely to boost its bottom line and with Patisserie Holdings forecast to increase its earnings by 22% in the current year and by a further 14% next year, its price-to-earnings growth (PEG) ratio stands at just 1.5. This indicates that it offers excellent long-term growth prospects even after its shares have soared by 26% in the last year.
One to watch
Meanwhile, Gulf Keystone Petroleum(LSE: GKP) continues to have a relatively uncertain future. Its debt situation remains a concern for investors, with it stating last month that it had agreed a debt standstill ahead of a debt restructuring. And with it still being owed millions from past oil production, the outlook for the company's bottom line is challenging.
Although Gulf Keystone Petroleum's shares have risen by 15% in the last month, this is at least partly due to improved sentiment for the wider oil and gas sector. With the company's risks being high due to its financial outlook as well as the continued risks of operating close to a major conflict zone, there seem to be superior risk/reward opportunities available elsewhere within the oil and gas sector.
Therefore, while positive news flow could cause investor sentiment to rapidly improve in the short term, Gulf Keystone Petroleum seems to be a stock to watch rather than buy at the present time.
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Peter Stephens owns shares of SSE. 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.