01925 937 499

Authoradmin

Home»Articles Posted by admin

With a decline in the Anglo American share price, I recommend this FTSE 100 stock as an immediate buy!

Equity markets have been a bit of a snooze in the past few days, with the FTSE 100 making sideways movements. Understandably, this is hardly an inspiring time for fresh investment decisions. But some companies are sure looking attractive right now!

Recently, I talked about gold miner Randgold Resources, which makes for a great defensive play in the event of an economic slowdown. But even otherwise, there are other interesting mining companies around. Case in point being the multi-commodity miner, Anglo American (LSE: AAL), which has a lot going for it right now too!

Strong financial health

First things first: the companys fundamentals are solid, with much potential to provide great returns to investors moving forward. Both its revenues and profits are strong and growing. In its last results update, Anglo American also showed reduced debt, which is positive for its long-term financial sustainability.

I like the fact that the company has been able to keep debt contained, despite its recent investments. Most recently, its subsidiary acquired complete control over a South African platinum joint venture by buying out the other stakeholders. Anglo American also invested in a copper project in Peru a few months ago. These purchases have been balanced by selling off interests in other projects.

If you are an investor looking at the dividends, there is positive news here as well. Anglo American has also improved its dividend per share compared to the previous year by a little over 2%.

Dips are buying opportunities at attractive valuations

It is little wonder then, that its share price has significantly outperformed the FTSE 100 index. While the latter is currently at a value lower than that during the same time last year, the formers share price has risen 25% higher, on average, in November so far.

Admittedly, it is a more volatile stock than the FTSE 100 index, but it is for this reason itself that I believe it should be considered. Higher volatility means that dips are sharper for this stock than the index as a whole as well. This allows for good buying opportunities at such times as right now, since the Anglo American share price has been softening steadily for much of November so far.

But the icing on the cake is really that the price to earnings (P/E) ratio for the company, at 9x, is much lesser than that for peer companies like BHP Bilton, Antofagasta and Fresnillo! It bears mentioning, though, that its trading at valuations similar to Glencore and Rio Tinto, but there is almost no company with a significantly lower P/E ratio than Anglo American. In other words, this stock is available at a lower price relative to a number of peers.

I recommend buying Anglo American shares today, if you can stomach short-term volatility in favour of good long-term results!

Want To Boost Your Savings?

Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled “The Foolish Guide To Financial Independence”, which is packed full of wealth-creating tips as well as ideas for your money.

The report is entirely free and available for download today, so if you’re interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?


Falling cannabis prices weigh on Tilray’s sales growth

This article was originally published on Fool.com

Amid all thehype about marijuana stocks, the one great equalizer comes when companies have to report their financial results.Tilray(NASDAQ:TLRY)has seen an amazing level of interest since its decision to list on the Nasdaq Stock Market earlier this year, and now, many investors are watching closely to see if the cannabis contender has the ability to live up to its full potential.

Coming into Tuesdays third-quarter financial report,Tilray investors were looking for solid sales growtheven as red ink continues to flow. Tilray wasnt able to deliver quite the top-line rise that most had expected, and part of the blame might be the reduced prices that the company brought in from its cannabis sales. Thats a trend that shareholders will want to keep an eye on even as the rollout of recreational cannabis in Canada boosts results in the fourth quarter.

Jar of dried cannabis with seeds and papers on a wood table.

IMAGE SOURCE: GETTY IMAGES.

Tilray benefits from the boom in cannabis

Tilrays third-quarter results were just the latest example of marijuana companies delivering impressive-looking results. Revenue of $10.0 million was higher by 86% from the third quarter of 2017, although it was slightly less than the $10.2 million that most of those following the stock had expected to see. Losses of $18.7 million were also much worse than in the year-ago period, but after allowing for non-cash compensation expenses, adjusted net losses of $0.08 per share were better than the $0.12 per share loss that marked investors consensus forecast.

Tilrays fundamental results showed a mixed performance. On one hand, Tilray did a good job of boosting its production and sales capacity, with total sales volume of 1,613 kilogram-equivalents sold marking a 136% rise from the 684 kilos that the company sold in the third quarter of 2017. The company attributed the gains to increased demand from patients using medical marijuana, as well as bulk sales to other licensed producers of cannabis products and Tilrays efforts to distribute its product on a wholesale basis for export.

However, pricing pressures had a negative impact on Tilrays overall sales numbers. The cannabis producer said that its average net selling price fell to $6.21 per gram, down sharply from the $7.53 per gram that it brought in during the year-earlier period. Tilray attributed the reduction to a change in its sales mix, which included more bulk sales than in the same period during 2017.

Tilray also held nothing back when it came to spending money to try to build market share. Sales and marketing expenses were up by nearly 150% from year-earlier levels, and overhead costs rose by about the same percentage. In addition, Tilrays stock-based compensation expenses jumped to $11.2 million, up from just $35,000 and showing the way that employees of the company are sharing in the stocks success. With Tilray in an all-out competitive effort to position itself well for Canadas recreational cannabis rollout, investors fully expected the company to take the opportunity to try to grab market share.

Can Tilray keep gaining ground?

CEO Brendan Kennedy tried to keep investors focused on the long run. We are in the early stages of achieving our growth potential, Kennedy said, and our team continues to strategically execute on disciplined operational initiatives and investments to support Tilrays long-term, sustainable growth as the pace of legalization continues to accelerate around the world. The CEO reiterated the companys commitment to serve both the medical and recreational cannabis markets both in Canada and globally.

With respect to theCanadian rollout, Tilrays comments were minimal. The company managed to secure cannabis supply agreements with eight Canadian provinces and territories, including the key areas of Ontario, Quebec, and British Columbia, along with Manitoba, Nova Scotia, Yukon, Northwest Territories, and Prince Edward Island.

Instead, Tilray seems more focused on global opportunities. The cannabis company highlighted its acquisition of Alef Biotechnology to allow exports to Chile, with the intent of distributing products around Latin America. Wins in Germany, the U.S., and Australia also showed the benefits of Tilrays attempts to become a worldwide player in the marijuana industry.

Tilray investors didnt see the results as being particularly inspiring, and the stock dropped between 1% and 2% in after-hours trading following the announcement. Those following the marijuana industry will have to watch closely to see how well Tilray does in capturing new cannabis users in Canada during the fourth quarter, but theyll also want to keep an eye on the companys bigger plans to create a global marijuana empire.

Cannabis Stocks: Get Ready for Green Rush!

On 17th October 2018, recreational cannabis use became legal across the whole of Canada ushering in a new era of legitimacy for the countrys burgeoning multi-billion-dollar marijuana industry.

But how can you aim to profit from this sectors huge potential while reducing the risk of seeing your cannabis investments go up in smoke?

The Motley Fools leading cannabis sector analyst has put together this timely special report for UK investors that explains how to get started and reveals one cannabis stock that we think youll want to avoid!

Click here to learn more and to secure your FREE copy.


Canopy Growth leaves marijuana investors feeling low

This article was originally published on Fool.com

This week has been a big one for themarijuana industry, as some of the biggest companies in the budding sector have given their latest reports about their financial condition. Many investors have looked toCanopy Growth(NYSE:CGC)as the bellwether in the cannabis space, especially given the huge commitment that beer and spirits giantConstellation Brandshas made to the company.

Coming into Wednesdays fiscal second-quarter financial report, Canopy investors expected that the company would be able tokeep up with its cannabis-producing rivals. Some of Canopys numbers disappointed its shareholders, but the company put itself in position during the past few months to meet its supply commitments as Octobers legalization of recreational cannabis in Canada loomed. That will prove far more important to the long-term success of the company, even if investors cant get past the immediate letdown of seeing financial metrics fall short of their hopes.

Canopys revenue rise falls short

Canopy Growths fiscal second-quarter results were in line with what the company had expected, even if they werent entirely satisfying to others. Revenue of 23.3 million Canadian dollars was higher by 33% from year-ago levels, but that was well below the near-tripling that some of those following the stock were expecting to see on the top line. Canopy reported a loss of CA$330.6 million, working out to CA$1.52 per share, which was far worse than the consensus forecast among investors for CA$0.08 per share in red ink.

Canopys financial performance was a natural result of its overall strategy. The cannabis company made only small test shipments of products into recreational channels during the quarter, ensuring that supply chain logistics would work correctly going into mid-Octobers Canadian launch but avoiding larger pre-sales. That should make the current quarters performance look even more impressive, showing the true growth from the rollout.

Fundamentally, Canopys numbers were mixed. The company reported a 34% rise in active registered patients using medical marijuana, hitting 84,400 for the period. Sales volume of cannabis rose only slightly, with a 9% gain to 2,197 kilogram equivalents. However, Canopy stocked up in advance for theCanadian rollout, harvesting 15,127 kilos of cannabis, up 265% from last years 4,167 kilos during the same quarter.

One really bright spot for Canopy was its ability to maintain good pricing power in a tough industry environment. Even as rivals likeTilrayandCronos Groupdealt with lower average sales prices, Canopy reported a 24% rise in its selling price to CA$9.87 per gram. The reason for the success was that the company made more sales to the German market, where pricing is more favorable, and also did a better job of selling itsSoftgel capsules. More than a third of Canopys revenue during the quarter came from cannabis-derived oils, and their value-added features are beneficial both for customers and for the company.

Co-CEO Bruce Linton kept investors focused clearly on whats happening right now. Our entrance into the retail cannabis market has been a success, Linton said, with our SKU assortment obtaining over 30% listings market share in multi-store physical retail store networks nationwide. He pointed to ample inventory levels and strong market conditions that should put Canopy in position to build and sustain a leadership role in the Canadian recreational cannabis market.

Whats ahead for Canopy?

Canopys role in Canada will be critical, with the company having supply commitments of 70,000 kilos to provinces across the country, excluding Ontario. Supply shortages plagued the market early on, but average shipment volume has doubled during the first part of November compared to the last half of October. Retail locations in its Tweed andnewly acquired Tokyo Smokestore concepts are just the beginning of a big growth campaign to add 20 new stores in the next year. Not all provinces allow proprietary store networks, but those that do are a big opportunity for Canopy to differentiate itself from its rivals.

Efforts to expand production continue to make headway. New facilities are coming on line incrementally, and Softgel production in particular has jumped tenfold since last year. Internationally, Canopy has completed its first U.S. shipment under approval by the U.S. Drug Enforcement Administration, and efforts in Latin America and the Caribbean, Australia, and Europe all point toward an expanded role for the cannabis company as markets develop worldwide.

Canopy wasnt shy about its profligate spending. Sales and marketing costs jumped more than fivefold from year-earlier levels, and overhead costs more than quadrupled. However, Canopy believes that strong brand recognition will be the key driver of market share, and spending now should reward shareholders in the long run.

Canopy investors didnt immediately agree, and the stock dropped more than 9% in pre-market trading following the announcement. Yet despite results that fell short of expectations on their face, the strategy that Canopy Growth is following shows a long-term focus that will put the marijuana company in the best position to capture opportunities far into the future.

Cannabis: How You Could Profit from the Green Rush

With recreational and medicinal cannabis use now fully legal throughout Canada (not to mention in 30 US states to varying degrees), we think now could be the perfect time to start adding cannabis stocks to your own portfolio as the Green Rush gathers speed!

To help you navigate the potential risks and rewards, The Motley Fools leading cannabis sector analyst has put together this timely special report explaining what we think every UK investor needs to know about this exciting profit opportunity and reveals one cannabis stock that we reckon youll want to cross off your shopping list right away!

Click here to learn more and to secure your FREE copy.


Why I think you have to beat your cash ISA addiction and invest in stocks and shares instead

What is it with cash ISAs? British savers love them, pouring tens of billions into the tax-free savings accounts every year. And what do they get in return? A slap in the face. Heres why you should declare an end to your personal cash ISA affair.

Love is the drug

They may be free of tax, but they still carry a hefty price tag. The UKs cash ISA addiction has cost savers an incredible 127bn over the past two decades, according to new research from Scottish Friendlyand the Centre for Economics and Business Research. Thats how much Britons have missed out on because of their reluctance to invest in the stock market.

Yet even though stocks and share ISAs have delivered far better returns over the longer run, Britons cannot renounce their passion for the cash equivalent, which remains vastly more popular. Four out of 10 people save into a cash ISA, more than double the amount (just 18%) who invest into a stocks and shares ISA.

127 billion reasons

Savers have earned a total of 75bn in tax-free interest since cash ISAs were first introduced in April 1999, based on HM Revenue & Customs figures. They could have earned 202bn if theyd invested in the stock market instead. Thats 127bn more!

Interest rates on cash ISAs have plummeted in the decade since the financial crisis, while the stock market has grown strongly, despite Octobers turbulence.

Savers who had used their full cash ISA allowance every year to 1 October would have accrued an average of 20,628 in tax-free interest, less than a third of the 70,987 they would have achieved from a stocks and shares ISA. Yet the affair drags on, regardless of the cost.

Dont be scared

One problem is that getting started with investing seems daunting, with a quarter saying they dont understand stocks and shares. A few visits to Fool.co.uk should help with that.

Around a third either fear losing money, or simply prefer the security of cash. But that doesnt mean you should shun shares altogether when theres plenty you can do to reduce the risks. First, you should never invest money youre likely to need in the next five years, to give you time to recover from any crash. As you get older, you should also reduce your exposure to shares, shifting money into lower-risk alternatives, such as bonds and, yes, cash ISAs.

Break the habit

However, if youre saving for long-term goals such as retirement, then cash ISAs will only eat your wealth. The average easy access account pays just 0.5% right now, while inflation stands at 2.4%. This means the value of your money is falling in real terms.

Cash ISAs have lost their looks due tothe toxic combination of pitiful savings rates and rising inflation, but savers still swoon out of habit. Its time to let go and move on, at least with some of your savings pot. These 2 investment trusts could help you get started.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn’t easy. But you can get ahead of the herd by reading the Motley Fool’s FREE guide, “10 Steps To Making A Million In The Market”.

The Motley Fool’s experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simply click here for your free copy.


Why I think you have to beat your cash ISA addiction and invest in stocks and shares instead

What is it with cash ISAs? British savers love them, pouring tens of billions into the tax-free savings accounts every year. And what do they get in return? A slap in the face. Heres why you should declare an end to your personal cash ISA affair.

Love is the drug

They may be free of tax, but they still carry a hefty price tag. The UKs cash ISA addiction has cost savers an incredible 127bn over the past two decades, according to new research from Scottish Friendlyand the Centre for Economics and Business Research. Thats how much Britons have missed out on because of their reluctance to invest in the stock market.

Yet even though stocks and share ISAs have delivered far better returns over the longer run, Britons cannot renounce their passion for the cash equivalent, which remains vastly more popular. Four out of 10 people save into a cash ISA, more than double the amount (just 18%) who invest into a stocks and shares ISA.

127 billion reasons

Savers have earned a total of 75bn in tax-free interest since cash ISAs were first introduced in April 1999, based on HM Revenue & Customs figures. They could have earned 202bn if theyd invested in the stock market instead. Thats 127bn more!

Interest rates on cash ISAs have plummeted in the decade since the financial crisis, while the stock market has grown strongly, despite Octobers turbulence.

Savers who had used their full cash ISA allowance every year to 1 October would have accrued an average of 20,628 in tax-free interest, less than a third of the 70,987 they would have achieved from a stocks and shares ISA. Yet the affair drags on, regardless of the cost.

Dont be scared

One problem is that getting started with investing seems daunting, with a quarter saying they dont understand stocks and shares. A few visits to Fool.co.uk should help with that.

Around a third either fear losing money, or simply prefer the security of cash. But that doesnt mean you should shun shares altogether when theres plenty you can do to reduce the risks. First, you should never invest money youre likely to need in the next five years, to give you time to recover from any crash. As you get older, you should also reduce your exposure to shares, shifting money into lower-risk alternatives, such as bonds and, yes, cash ISAs.

Break the habit

However, if youre saving for long-term goals such as retirement, then cash ISAs will only eat your wealth. The average easy access account pays just 0.5% right now, while inflation stands at 2.4%. This means the value of your money is falling in real terms.

Cash ISAs have lost their looks due tothe toxic combination of pitiful savings rates and rising inflation, but savers still swoon out of habit. Its time to let go and move on, at least with some of your savings pot. These 2 investment trusts could help you get started.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn’t easy. But you can get ahead of the herd by reading the Motley Fool’s FREE guide, “10 Steps To Making A Million In The Market”.

The Motley Fool’s experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simply click here for your free copy.


One recovery stock I’d consider buying today, and one I’d ignore

Smiths Group (LSE: SMIN) is up almost 6% today on news that itplans to separate its underperforming medical division from its much stronger core industrial tech business. This is the news many investors had been waiting for.

The Smiths

Management said that breaking off Smiths Medical should allow the remainder of the groupto concentrate on growing as an Industrial Technology group, united by shared business characteristics and a common operating model.

This should have the further benefit of freeingSmiths Medical to deliver on its full potential and capitalise on its leading positions, large programme of new product launches and to exploit value creating opportunities in its rapidly changing market,although investors will have to wait until its interim results in March to hear more.

Stretch out and wait

The group also published a first quarter trading update today that reported expectations for the year remain unchanged.

Investors in Smiths need something to feel less miserable about, with the stock down 22% over the past six months and trading 5% lower than five years ago. The medical devices and equipment division has done particularly poorly, having been hit by regulatory and contract challenges (now abating), but previous attempts to offload it floundered. At least it remains on course to grow in the second half.

Well I wonder

ItsJohn Crane arm continues to showgood growth with an acceleration in orders and further strong aftermarket demand.Smiths Detection expects a strong second half, supported by a robust order book, while Smiths Interconnect and Flex-Tek are growing well.

Investors are banking on the fact that the break-up of the 5.5bn FTSE 100 business will unlock value. Earnings growth has been patchy for years, while revenues have grown only slowly. Despite recent woes, theres no discount with the stock trading at 14.9 times earnings, with a forecast yield of 3.3%, and cover of 2.1.One for your watch list, though.

Boeing, Boeing, gone

Aerospace and defence groupCobham (LSE: COB) is down around 2% today after publishing a trading statement for its first 10 months that was as expected, while itcontinues to make progress in executing its turnaround programme.

Underlying operating profit in Mission Systems and Communications and Connectivity was stronger, offsetting weaker performances in Advanced Electronic Solutions and Aviation Services.

The FTSE 250-listed groupsbiggest headache is its KC-46 aerial refuelling tanker programme for Boeing. The US aviation giant is claiming as yet unquantified damages from Cobham, and is withholding payments of its invoices.

Damaging

Today, Cobham said it has delivered a total of 18 production-standard Centerline Drogue Systems under itsKC-46 programme, adding that qualification of the Wing Aerial Refuelling Pods remains in its early stages with risks relating to schedule and cost.Discussions with Boeing continue regarding its unquantified damages assertions and payment withhold,so theres no clarity for investors here, which hasnt helped the share price.

Management anticipates significant trading activity in the final two months, but its hard to construct a buy case with the stock trading at a pricey 21.6 times forecast earnings (despite falling 48% in three years), and yielding just 0.6%.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn’t easy. But you can get ahead of the herd by reading the Motley Fool’s FREE guide, “10 Steps To Making A Million In The Market”.

The Motley Fool’s experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simply click here for your free copy.


Will the Sirius Minerals share price ever return to 45p?

Sirius Minerals (LSE: SXX) and Renold (LSE: RNO) are two companies Ive written about positively in the past. The former is the FTSE 250-listed developer of the worlds largest polyhalite deposit. The latter, which released its half-year results today, is an international supplier of industrial chains and related power transmission products.

Both companies shares are currently well below their previous highs. As such, theres considerable upside potential for investors today, if they can regain their former levels. But can they do so?

Back on track

Renolds shares are trading at 36.5p (up 5.5% today), but remain well below this years high of 54.5p in January. I tipped the company as a recovery stock in May at 26.5pon the view that certain problems it had suffered were short term and eminently fixable. Todays results show the business firmly back on track, after it successfully passed on increased raw materials costs to customers and resolved some machine breakdown issues.

Revenue for the six months ended 30 September was up 6.3% at constant exchange rates. Underlying operating profit advanced 36.7%, and earnings per share (EPS) increased 44.4%. The company said its on course to deliver a full-year result slightly ahead of the Boards previous expectations.

Prior to todays numbers, City analysts were forecasting EPS of 4.8p for the year, while Id pencilled-intowards 5p.Based on 5p, which looks reasonable, the price-to-earnings (P/E) ratio is just 7.3.

Current net debt of 31m doesnt look too onerous versus a market capitalisation of 82m, but the balance sheet also shows a large pension deficit of 95m, down from 101m this time last year. The size of the deficit makes Renold a higher-risk stock. But the company has a multi-decade funding plan in place, and the cheap P/E and good progress of the business lead me to rate it a buy.

Equity dilution

I turned bearish on Sirius Minerals on 3 September in an article with an admittedly somewhat inflammatory title: Could the Sirius Minerals share price crash 50% by the end of the year? Much as I admired the companys achievements to date, I felt the share price of 36p didnt adequately reflect the risk of a dilutive equity fundraising, as part of the upcoming stage 2 financing. Reluctantly, I rated the stock a sell.

Three days later, Sirius announced it had increased its stage 2 capital funding requirement from $3bn to between $3.4bn and $3.6bn. At the same time, it said it wouldnt seek to increase debt financing above its previous $3bn target. With the spectre of a dilutive equity fundraising entering stage left, the shares dived and are currently trading at around 23p.

When the share price was at its 45.5p high (in August 2016), there were 2.3bn shares in issue, giving Sirius a market cap of 1.05bn. Today, at 23p, the market cap is actually higher (1.08bn), because there are now 4.7bn shares in issue. With further dilution very much in the offing after the increase in capital funding required and there also being no guarantee lenders will agree to advance the full $3bn of debt Sirius is after its hard to see the shares making a swift return to 45.5p. Im minded to avoid the stock at this stage, and await greater visibility on the level of dilution.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn’t easy. But you can get ahead of the herd by reading the Motley Fool’s FREE guide,“10 Steps To Making A Million In The Market”.

The Motley Fool’s experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simplyclick here for your free copy.


Why I think this ‘secret’ dividend grower looks set to shine

Three years ago, I punched outan article about Speedy Hire (LSE: SDY), the tools, equipment and plant hire services company. At the time, the share price stood at 31p, which was more than 61% below the highs achieved at the beginning of the year.

I argued back then that the firm had cyclical operations dependent on the fortunes of the industries it served. But I thought that trading should have been robust in this mature stage of the current macro-economic cycle,concluding that the firms problems were internal and the stock was,therefore, a turnaround proposition.

A turnaround in the making

Indeed, back then, the chief executive pointed to several reasons for the decline in revenues and profits that caused the shares to plunge. Such as a lack of focus on the companys bread-and-butter small and medium enterprise (SME) customers. On top of that, there had been poor execution of a number of business improvement programmes, including a new IT system, and it all ended up with key products being unavailable in many of the firms depots. The top executive went further, explaining there had been a lack of ownership, empowerment and accountability within the business.

I concluded back then that Speedy Hire had been getting the basics of its business wrong, but thought it could do much, relatively quickly, to put its house in order. I owned up that Id be surprisedif the directors recovery plan didnt result in the shares rising from where they were. So, lets check back in to see how the turnaround worked out so far, and what forward prospects look like for Speedy Hire today.

The share price now sits close to 60p, so it has almost doubled over three years, driven by a strong recovery in revenue and earnings. City analysts following the firm expect earnings to advance a further 15% in the current trading year to March 2019, and 15% again the year after that. Meanwhile, if the analysts predictions prove to be correct, the dividend will have increased since 2015 by more than 200% by March 2020, which is remarkable, because previously the dividend had been stagnant for years. Based on the figures, it looks like Speedy Hire is set to shine as a dividend-growing investment and the secret about the firms progress with dividends will soon be out in the open.

Attractive ongoing growth and income

The figures tell us that the turnaround has been successful, and todays half-year report demonstrates further progress. Continuing revenue rose 6% compared to the equivalent period the year before, and adjusted earnings per share shot up 24%. The directors expressed their confidence in the outlook by pushing up the interim dividend by 20%, which is a big rise, suggesting that the business is now in good health.

The chief executive, Russell Down, said in the report he thinks the results demonstrate the progress made implementing a customer-focused strategy and growing the firms SME customer base. Hes confidentthe company will meet full-year expectations. I reckon Speedy Hire has turned itself around and now looks attractive as a dividend and growthproposition, albeit one operating in a cyclical sector.

Five Income Stocks For Retirement

Our top analysts have highlighted five shares in the FTSE 100 in our special free report “5 Shares To Retire On”. To find out the names of the shares and the reasons behind their inclusion, simply click here to view it right away!


Oh God! Is the Sainsbury’s/Asda merger doomed to fail?

Investor appetite for J Sainsbury (LSE: SBRY) may have picked up on news of potentially-transformative M&A action in the spring, but Im afraid to say that I still cant revise my bearish take on the business.

The FTSE 100 supermarkets share price has ascended almost 40% since the business announced that it was seeking a tie-up with Asda to dethrone Tesco and create Britains biggest grocery chain.

The rationale behind the deal was that it would enable investment in areas that will benefit customers the most: price, quality, range and creating more flexible ways to shop in stores and through digital channels, with Sainsburys predicting that prices on some of the most popular products could fall by around 10%.

The opposition is mobilising

Theres no guarantee, though, that the deal will pass through the scrutiny of the Competition and Markets Authority (CMA) and receive the regulatory sign-off early next year. And opposition to the deal is steadily ramping up, chucking additional mud into the waters.

This week an anonymous supplier to the grocery sector advised that the merger would see the enlarged group, and Tesco, between them control 70% of the market. Supplier B, as it is simply known, said that the merger would have significant negative implications and raise material competition issues at all levels of the supply and distribution chain, which ultimately will be extremely detrimental for consumer welfare. It added that the move could facilitate collusion between the new entity and Tesco ultimately harming consumers.

The National Union of Farmers has also waded into the argument in recent days. In its own communiqu to the CMA it warned that continuously squeezing marginal gains from the supply base takes away the value chains ability to continuously improve quality, range and ultimately challenges the sustainability of British supply chains. This in our opinion may lead to negative outcomes for consumers.

Sainsburys has of course talked up the benefits of the deal to consumers by allowing it to negotiate more effectively with suppliers.

Sales sliding again

Without question, Sainsburys needs to do something revolutionary to shake up its operations, the urgency of which was laid bare by fresh industry numbers from Kantar Worldpanel released this week.

These data showed that Sainsburys was the worst performing of the countrys so-called Big Four chains during the 12 weeks to November 4, its till rolls falling for the first time since June and slipping 0.6% year-on-year.

But of course there is no guarantee that the merger will give sales the much-needed injection Sainsburys so desperately requires given the rampant progress that Aldi and Lidl are making.

As Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel commented: Five years ago, just under half of British households were visiting one of the discount retailers at least once in a 12 week period. This now stands at almost two-thirds, which is reflected in their continued growth. Numbers are only likely to keep growing, too, as both of the German discounters embark on their aggressive expansion policies.

Whether or not the planned mega-merger of Sainsburys and Asda goes ahead, I believe that the Footsie supermarkets long-term profits outlook remains murky at best, and this is not reflected by its forward P/E ratio of 15.6 times. I think its a share that remains best avoided at the present time.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn’t easy. But you can get ahead of the herd by reading the Motley Fool’s FREE guide, “10 Steps To Making A Million In The Market”.

The Motley Fool’s experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simply click here for your free copy.


Why I’m still avoiding FTSE 100 energy giant SSE and its 8%+ dividend yield

With its eye-popping dividend yield, its only natural that energy supplier SSE (LON: SSE) should attract the attention of those looking to generate income from their investments, particularly as savings rates continue to be so derisory. For me, however, the stock is very much one to avoid.

Merger in doubt

Todays interim results covering the six months to the end of September, while actually ahead of expectations made by the company only a couple of months ago (explaining why the shares are higher this morning), were hardly worth shouting about.

Excluding its Energy Services business, adjusted pre-tax profit fell a little below 41% to 246.4m over the period. On a reported basis, the company posted a pre-tax loss of 265.3m (compared to a profit of 409m a year earlier) and loss per share of 22.6p.

On a slightly more positive note, the 12bn cap stated that the outlook for its Networks and Wholesale businesses for the whole year was in line with that revealed in its last update on trading, with adjusted operating profit for the former set to increase by a mid-single digit percentage. The consolidation of all of its UK and Irish renewable energy assets under the umbrella of SSE Renewables was also announced.

Nevertheless, the company has clearly not performed for its owners. With SSE conceding that there was now some uncertainty surrounding the proposed merger between its Energy Services and npoweras a result of the cap on default tariffs being implemented at the start of 2019, I think the next six months could be just as tough.When its considered that the former now expects adjusted operating profit margin at this part of its business to be between 2% and 3% for the current year, down from 6.8% in 2017/18 (and for this to be lower still in 2019/20), its not altogether surprising that the deal is on shaky ground.

Dividend at risk?

Even after taking into account this mornings positive reaction, SSEs share price has dropped by 14% in the last year, leaving its stock trading on 12 times earnings and offering a massive forecast yield of 8.3%. While such a high payout is usually indicative of an imminent cut, the actions of SSEs management suggest otherwise.

In spite of todays woeful numbers, the company saw fit to announce an interim dividend of 29.3p per share, equating to a rise of 3.2% on that awarded in the previous financial year. In addition to this, SSE stuck by its recommendation of a 97.5p per share payout for the full year, in accordance with the five-year plan revealed to the market back in May.Time will tell whether this was a good call or not. Personally, I find the fact that this dividend isnt likely to be covered by profits sufficiently worrying.

But its not just low dividend cover, growing competition and political interference that makes me wary of companies such as SSE. Thanks to their tendency to offer bigger yields than firms in other sectors, utility stocks have been in great demand during this extended period of low interest rates. With rates beginning to rise again, these businesses could suffer more than most as investors move away from bond proxies and into other assets.

If youre seeking safe and dependable dividends, I think it would be best to look elsewhere.

Are You Prepared For Brexit?

Following Brexit, fear and indecision could hurt share prices in the coming months. That’s why the analysts at the Motley Fool have written a free guide called “Brexit: Your 5-Step Investor’s Survival Guide”. To get your copy of the guide, click here now!


Femi Ogunshakin Managing Director
I hope you've enjoyed visiting our website. Let me know if there’s anything either me or one of my colleagues can do to help by completing the form below and clicking the send button.