4 turnaround opportunities for the long run? Centrica PLC, Interserve plc, Petrofac Limited and Provident Financial plc

Could these 4 shares deliver successful recoveries? Centrica PLC (LON:CNA) (CNA.L), Interserve plc (LON:IRV) (IRV.L), Petrofac Limited (LON:PFC) (PFC.L) and Provident Financial plc (LON:PFG) (PFG.L)

Centrica PLC
Centrica PLC

Turnaround opportunities can be risky but may also bring high rewards, and that’s why I’m considering the outlooks for Centrica PLC (LON:CNA) (CNA.L), Interserve plc (LON:IRV) (IRV.L), Petrofac Limited (LON:PFC) (PFC.L) and Provident Financial plc (LON:PFG) (PFG.L).

Centrica’s share price fall of around 40% in the last year shows that investor sentiment towards the utility company is relatively weak. In my view, this situation could continue in the short run, since the company’s operating performance has been disappointing of late.

However, with cost savings set to be recorded and its restructuring continuing, the stock could make gains in the long run. With the potential to pay a dividend yield of 8% this year, Centrica remains an appealing income stock to my mind.

Petrofac Limited’s stock price is down 45% in the last year. The company continues to be hurt by the uncertainty which the SFO investigation brings in my opinion. It seems to have caused investors to remain cautious about the stock’s outlook in spite of improved prospects for the oil and gas industry.

With Petrofac having the capacity to win further contracts, its financial performance may remain strong in the near term. However, until more is known about the outcome of the SFO investigation, it’s not a stock I’m looking to add to my portfolio.

Provident Financial’s 69% decline in the last year shows that even the largest stocks can be subject to major falls. Its home credit division was a major catalyst behind its share price fall. While a new strategy has been put in place to turn it around, I’d rather wait for evidence of this before buying it.

With an FCA investigation ongoing, Provident Financial seems to have significant risks at the moment. This could mean that there are better risk to reward opportunities elsewhere for me.

Interserve’s recent update shows that it is making progress with its own turnaround plan. It is on course to generate efficiencies in the current year, and this could help its financial performance to improve.

Of course, Interserve faces tough market conditions. Its financial standing is also less stable than many investors would hope for. However, it does appear to have turnaround potential. For me, though, I feel there could still be volatility ahead and I’m waiting for further evidence of its progress before considering adding it to my portfolio.

About Robert Stephens 3630 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email info@investomania.co.uk or use one of the other contact methods available on the 'Contact Us' page