Shares in Burberry(LSE: BRBY) have soared by 17% in the last month, with speculation regarding a potential bid for the fashion house spurring its shares onwards and upwards. While there can be no certainty that a bid will be made, it would not be a major surprise, as Burberry is a high quality company trading on an appealing valuation.
Although its focus on emerging markets has hurt its recent financial performance and, prior to recent months, caused its share price to decline, Burberry has a bright long term future. Markets such as China have tremendous growth prospects from the expected consumer boom in the coming years and with Burberry being well-positioned within key growth markets, its bottom line could soar over the coming years.
In addition, Burberry retains a high degree of customer loyalty. This provides it with the opportunity to increase its prices at a brisk pace so as to boost sales and profitability. And with its shares trading on a price to earnings (P/E) ratio of 19.1, there is upward re-rating potential since a number of other global consumer stocks trade of P/Es of well over 20.
Also making share price gains in recent weeks has been bookmaker William Hill(LSE: WMH). Its shares have risen by 5% in the last month, even though it released a set of rather disappointing results for the 2015 financial year. In fact, investors seem to have latched on to the company's upbeat outlook and plans to raise dividends rather than focus on the difficulties which it faces from increasing competition in the online gaming space.
While William Hill is expected to increase its bottom line by 4% in the current year, despite the difficult trading conditions, its shares appear to be rather fully valued. For example, they trade on a P/E ratio of 14.9 and with the wider market being relatively cheap, there appear to be better options elsewhere.
Meanwhile, resources company Glencore (LSE: GLEN) has been a star performer in 2016. Its shares are up by 62% year-to-date, with rising commodity prices being a key reason for this. Looking ahead, there is plenty of scope for further gains in their prices, although there is clearly a high degree of volatility and risk associated with buying Glencore right now.
Also boosting its share price have been reasonably positive updates regarding then company's debt reduction plans, as it seeks to improve its financial standing during challenging trading conditions. With Glencore expected to increase its bottom line by as much as 66% next year, its price to earnings growth (PEG) ratio stands at only 0.4. This indicates that there is plenty of scope for further capital gains over the medium term and so for less risk averse investors, Glencore could prove to be a sound buy.
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Peter Stephens owns shares of Burberry. The Motley Fool UK has recommended Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.