Professional analysts have more time, more data, and better access to companies than most private investors. As such, the wisdom of the City crowd is worth paying attention to at the end of the day, youre either going with the pros or going against them when you invest.
Royal Dutch Shell
The balance of support among City experts is much stronger for Shell than for rival BP. Furthermore, a number of analysts see Shell as attractive in an even wider context.
Credit Suisse, for example, makes Shell its top pick among Europes big oil companies, while, following Shells half-hear results at the end of last month, Bank of Montreal said,: We have moved our Top Pick designation in the global oil majors sector from Total to Royal Dutch Shell.
Credit Suisse described the half-year results as a royal performance, and was summing up the general view of bullish analysts when saying Shells investment strategy, depth of assets and cash flow generation will translate into superior shareholder returns.
The shares trade at 2,499p, giving a current-year forecast P/E of 11, which is appealing when compared with the FTSE 100 long-term average of 14. Shells forward dividend yield is also attractive at 4.5% versus the markets 3.2%.
Prudential, the Footsies biggest insurer, is another sector heavyweight with strong analyst support: 90% currently rate the company a buy.
Shore Capital said of Prudentials recent interim results: This is a particularly impressive performance given the tough forex and political headwinds that the group has had to contend with in the first half of 2014.
Prudentials shares have risen pretty strongly since the results. At a current price of 1,449p they trade on a forward P/E of 15 and offer a modest 2.5% prospective dividend income.
AIM-listed insurance outsourcing firm Quindell hasnt recovered from a scathing report by US shorting-selling outfit Gotham City Research back in April. Despite a rebuttal from Quindell and management initiating legal action against Gotham, the shares are currently trading at 164p down over 70% on their pre-Gotham-report price of 585p.
Quindell has released bullish trading updates through the summer and spectacular first-half revenue and profit numbers just last week. However, the markets unease since the Gotham report seems only to have been exacerbated by Quindells failure to be accepted for a Main Market listing in June and recent problems with a joint-venture with the RAC. Indeed, the fall of the shares and a current-year forecast P/E of just three suggests Quindell has lost the trust of many market participants.
In contrast, the City experts are uniformly bullish on the company. However, we should note that there are only three, and that two of those are Quindells own brokers. House brokers, of course, arent generally noted for taking a negative line on their paymasters.
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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.