Sunday share tips: Wood Group, Cake Box

(Sharecast News) - The recent failed takeover for Wood Group could present a buying opportunity for investors, suggests the Mail on Sunday's Midas column.

The disappointment of VC firm Apollo walking away from its 240p-per-share bid in May sent the stock tumbling to around the 140p level. It has recovered since then, to 156p as of Friday's closing price.

However, Midas highlights that Wood Group could still be undervalued, currently trading at less than nine times forward earnings for 2024. It cites comments from Investec, which said that if the stock was trading in line with the sector average valuation ratio, the shares would stand at 245p.

"The company has a diversified portfolio of clients in 60 countries, and the need for sustainable solutions for oil and gas companies is not going away," Midas wrote.

"Recovery may not be swift, but [...] today's Wood shareholders may find patience is rewarded. And there's always the chance of a nibble on the line from another interested purchaser in the short term. Reel this one in."

The recent underperformance of Cake Box could also present an attractive opportunity for investors, according to The Sunday Times's Lucy Tobin.

After floating in 2018 just over 100p a share, the stock was up over 400p in late 2021, but has since tanked to just 157p. Meanwhile, a 160p-a-share takeover approach from an Australian cheesecake company in July was rejected.

Nevertheless, things are looking up, Tobin writes. Sales across franchised sites rose nearly 7% in the first 17 weeks of its financial year.

The company also said it is seeing signs of easing inflation in some key ingredients such as fresh cream, while its trial of supermarket kiosks in Asda is providing successful.

"Cake Box is light on capital demands and is cash-generative, but the shares are trading at a price/earnings ratio of only 13," Tobin said. "Let them eat cake - and profit off the back of it. Buy Cake Box."