Friday Email: 19 September 2014
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
It continues to be a tough market, but it was pleasing to see one of our favourite stocks, Easyjet, increase its payout ratio to 40% of after tax profits and announce an increase in the size of its fleet by 34.5% by 2019. It still remains cheap on a forward P/E to September 2015 of just 10.6x, a pretty large discount to the market. The dividend cover will still be very high after the uplift and they have said that they will continue to return excess cash to shareholders which should result in either another uplift in the payout ratio or more special dividends. The uplift provides us with a 21% increase in the dividend that will be announced with the year end September 2014 results. The stock rallied on the news but fell back as the day wore on. Another stock that I have been following closely is BHP Billiton which is starting to look very good value indeed as it nears its 52 week low. Investors are still sulking about its decision to demerge parts of the business as opposed to returning cash to shareholders.
From a corporate perspective, the week just past was very quiet with not much to shout about other than the big dividend increase from Galliford Try.
Today brought the result of the Scottish referendum which should take some uncertainty out of the market and in early trade the market has rallied strongly for an assault on the 6850 level. In-pre market trade we are at 6882 at 7.54am. Will it hold?
Next week continues to be quiet on the corporate front and we will see what Toumaz has to say on Friday as it publishes its interim results.
We produced our report on the top of the Optimizer earlier in the week and later today or Monday we will produce our dollar denominated report. The pound should rally on the Scottish news.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 12 September 2014
That was a tough week when any advance on 7000 for the FTSE 100 was scuppered by an opinion poll showing that the Scotttish people may vote yes in the referendum next week. Clearly, the market thinks it will be a bad thing. It is difficult to imagine where the winners will be, either at a National level or inceed at a company level. Time will tell. No more on the subject other than to say that by the reaction to the poll, markets will fall sharply if there is a yes vote.