While BT Group(LSE: BT-A) may have bounced off the four-year troughs around 280p per share punched earlier this summer, I believe the telecoms titan remains in danger of sinking again.
But in this article I also plan to look at another stock on extremely shaky foundations, oilfield services provider Amec Foster Wheeler (LSE: AMFW).
Turnaround plan impresses
Amec rose in Thursday trading after announcing that it had swung to a £77m pre-tax profit between January-June from a loss of £446m in the corresponding 2016 half.
Celebrating the firm's move back into the black, chief executive Jon Lewis said he was that "encouraged that the first wave of benefits of the transformation programme we began last year is now evident."
"Operational discipline has improved, we have more than delivered on our cost-saving targets and we have also seen the first tangible signs of sustainable growth," he added. Amec has racked up £229m worth of asset sales since the final quarter of 2016, while the trading margin across its retained operations had improved by around 180 basis points.
The services giant had also seen the order book for its retained divisions edge 2% higher from the corresponding period last year, to £5.5bn.
... but top line remains under pressure
Still, I believe there is still plenty of risk surrounding the firm that would discourage myself at least from taking the plunge right now.
For one, the possibility of crude values remaining under the cosh as over-supply in the oil market persists is a very real threat to Amec's revenues picture in the near-term and beyond. Indeed, the London firm said today that "challenging conditions continue in some key markets (primarily upstream oil and gas and solar)." These troubles caused revenues to crash 24% in the first six months on an underlying basis, to £2.33bn.
Meanwhile, the ongoing investigation by the Serious Fraud Office into Amec's dealings with Una creates additional cause for concern. Indeed, the firm said in today's half-time report that "given the stage of this matter, it is not possible to estimate reliably what effect the outcome of it may have on Amec Foster Wheeler."
The company did assert that it does not expect the probe to derail its planned merger with John Wood Group, however. The tie-up is predicted to complete during the final quarter of 2017.
City brokers expect Amec to endure a 15% earnings slide in 2017, resulting in a forward P/E ratio of 10.5 times. While this multiple is low on paper, this is indicative of the high levels of risk the oilfield giant still carries. I for one won't be buying any time soon.
Back over at BT, the City does not expect any such earnings hiccups in the immediate future however, even as subdued sales growth and the accounting scandal in Italy weighs.
The company saw revenues growing just 1% during April-June, to £5.84bn. But it was the cost of compensating Deutsche Telekom and Orange for its trouble in the Med that really made BT suffer in the first quarter -- pre-tax profits tanked 42% as a result, to £418m.
While the number crunchers expect earnings to flip 12% higher in a cheap forward P/E multiple of 10.5 times, I reckon the rising trouble BT faces in the British public sector and corporate markets overseas still makes it an unappetising stock selection right now.
Super growth shares to help you retire early
It can be difficult to find hot growth stocks at the best of times, particularly during periods of huge political and economic uncertainty like these. But we at The Motley Fool are here to help.
Our A Top Growth Share wealth report, written by the Fool's crack team of analysts, looks at a brilliant FTSE 250 stock whose global sales are expected to top the magic £1bn marker in the near future.
Click here to enjoy this exclusive wealth report.It's 100% free and can be sent straight to your inbox.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.