Shares in cadmium-free quantum dots and other nano-materials developer Nanoco (LSE: NANO) have been given a boost today by a positive trading update. In fact, theyre 15% higher due to the release of an upbeat statement thatwill be delivered by the companys Chairman at todays AGM.
Whats his headlinenews? 2016 is set to be a landmark year for the business.
Watch and wait
Part of the reason for this is a speeding up of the planned transfer of production from the UK to South Korea. A recent trip to the plant indicated that Nanoco will be ready to supply material to meet potential customers commercial requirements inthe first quarter of 2016.
Nanocos newly formed lighting division is making impressive progress too, including the launch of four LED-based product groups as well as the potential for phototherapy products for the cosmetic treatment of skin.
Looking ahead, Nanoco is expected to remain lossmaking in the current financial year, but it clearly has significant long term potential. And while it has a relatively strong balance sheet and the potential for morepositive news flow, it may be prudent to wait for further evidence that its moving towards becoming a profitable business. Soit could be a stock worth watching rather than buying for now.
UK 1, Brazil 0
One stock thatappears to be worth buying for the long term is Santander (LSE: BNC). Its financial performance is being dragged down at the moment by an uncertain macroeconomic outlook for the Brazilian economy, which remains a key market for Santander. With the situation lookingunlikely to drastically improve in 2016, Santanders performance in the near term could be somewhat disappointing.
But for long term investors theres an opportunity to buy a major global bank for a relatively low price. In fact, Santanders shares have fallen in value by 50% in the last five years and this leaves them trading on a price to earnings (P/E) ratio of just 9.6. This indicates that theres limited downside especially with the bank being forecast to report positive earnings growth in both the current year and next year.
Looking ahead, Santanders position as a global player is likely to smooth out the problems in key markets such as Brazil. With the bank having an increasing reliance on the UK economy, the lack of monetary policy tightening expected for 2016 should help to offset Brazilian weakness. Meanwhile a fundraising conducted in 2014 has strengthened its capital position and should ensure that it remains a relatively resilient operation, even if the outlook for the global economy deteriorates.
Additionally, Santander is now becoming an increasingly appealing income stock. Although dividends were slashed in recent years in order to improve the banks financial outlook, shareholder payouts are now covered 2.5 times by profit and this indicates that theyre highly sustainable. And with Santander having a yield of 4.1% it could become increasingly popular in 2016 and beyond especially with it trading on such a low valuation.
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