Shares in betting firm Ladbrokes (LSE: LAD) have fallen by just 0.5% today despite the company reporting a hugely disappointing set of first half results. In fact, it has swung from a pretax profit in the first half of 2014 to a pretax loss in the first half of 2015, with shop closures and impairments contributing to a £51m pretax loss in the six months to June 30.
Clearly, this is hugely disappointing for the company’s investors and, while Ladbrokes has been touted as a strong dividend play owing to its relatively high yield, dividends have understandably been slashed. The company will now pay out 1p per share in its interim dividend, which is well down on the 4.3p per share that was paid in the first six months of last year.
Of course, the gaming industry is enduring a highly challenging period, with competition being very high and margins being squeezed. As such, sector consolidation is inevitable and Ladbrokes’ planned merger with Coral seems to make a lot of sense due to potential synergies and efficiencies that can be made. However, the road to recovery will be a challenging one and, while shares in Ladbrokes have already fallen by 16% in the last year, there could be further falls to come. As such, now does not appear to be the right time to buy a slice of the company.
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However, there are a number of stunning investment opportunities within the FTSE 350. Notably, pharmaceutical company AstraZeneca (LSE: AZN) appears to offer a very bright future of growth and, while it has endured a difficult period in recent years as a result of the loss of patents, it is expected to begin delivering growth in the next few years.
Undoubtedly, AstraZeneca is not yet the finished product, with further acquisitions required in order to improve its pipeline. However, the strategy being adopted by the business is very sound and has seen AstraZeneca focus on treatments for health issues such as diabetes, which are expected to become major global challenges in the long run. Therefore, it is positioning itself for excellent long term growth and, even though a bid approach is less likely following the closing of a US tax loophole, its yield of 4.1% and price to earnings (P/E) ratio of 15.9 continue to indicate that it is a very strong buy.
Similarly, IAG (LSE: IAG), owner of British Airways, has also struggled to post strong financial numbers in recent years. For example, it made a loss in 2012 but, with an improving global economy and lower oil price positively impacting sales and costs respectively, its profitability is on the rise. For example, IAG is forecast to increase its bottom line by 75% this year and by a further 20% next year. This could improve investor sentiment moving forward and, even though IAG has posted a share price rise of 67% in the last year, its price to earnings growth (PEG) ratio of just 0.2 indicates that there could be further growth to come.
