ITV (LSE: ITV) and Vedanta Resources (LSE: VED) have hammered the FTSE 100 so far this year, delivering big gains for shareholders.
After todays trading updates from both firms, I ask whether theres more to come or whether now might be a good time to lock-in some gains.
ITV
ITV needs no introduction most of us will watch the companys free-to-air TV channels on a regular basis.
What might not be so obvious is the way in which ITV has transformed itself into a content and advertising business, whose profits have risen by 412% since 2009 and are expected to rise by a further 27% in 2015.
ITVs latest move in its quest to reduce its dependency on income from advertising was to buy a company called Talpa Media, which is best known in the UK as the owner of The Voice, as well as lesser-known gems such as Dating in the Dark.
Whatever your view might be on the appeal of some of these programmes, the strategy has been a massive success for shareholders. ITVs share price has risen by 332% over the last five years, and by 43% over the last year alone.
What next?
ITV issued a trading statement today, reporting a 12% rise in total revenue during the first quarter, compared to the same period in 2014.
However, the firms shares fell by 2% following the announcement, and there were a few notes of caution in the statement. The total share of viewing of all ITV channels fell by 3% during the first quarter, while advertising revenue is expected to be 57% lower than last year during May and June, due to the boost provided by last years World Cup.
The question for ITV investors has to be what comes next? Trading on 16 times 2015 forecast earnings, and with a 2.9% prospective yield, the shares dont look overly expensive, but after a strong performance this year, earnings growth is expected to slow in 2016.
ITV still has strong momentum, and Im not going to try and call the top but it is something I believe ITV shareholders might want to start thinking about.
Vedanta Resources
Indian multi-commodity miner Vedanta Resources traded briefly below 400p earlier this year, providing bold investors with the chance to pick-up a 10% prospective yield and, as it turns out, lock in a 70% gain in just over three months.
Trading at todays price of 658p, Vedanta shares look much more reasonably priced. The shares hardly moved following the publication of the firms final results this morning, despite news of a whopping $4.5bn non-cash impairment due to lower commodity prices.
One reason for this stability is that Vedanta generates a lot of cash around $1bn of free cash flow last year, to be precise. This comfortably funded the firms $0.63 dividend, which provides a 6.1% yield at todays share price.
On the downside, the firm is expected to report a loss for the next two years, and net debt is a massive $8.5bn.
Overall, I reckon Vedanta shares are now fairly priced. Income-seekers might want to hold on, but now could be a good time for buyers who bought the shares when they were cheap to lock in a profit.
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Roland Head 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.
