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Friday Email: 26 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:

As we wondered last week whether the markets could truly test the stubborn 6850 level on the FTSE 100 following the vote in Scotland, we had an emphatic 'No' vote again as the markets plummetted and finished Thursday down massively as the Dow fell over 250 points in a single day.

The quiet season from a corporate perspective continues, but building giant Wolseley will report on Tuesday, as will Saga and we will initiate coverage in DividendMax following their results. We believe they will be an excellent demographic play over the coming years.

The outstanding stock of the past week for me was GVC which gives back a lot in dividends to shareholders, usually paying four dividends a year, throwing in special dividends as well. The numbers are fairly convincing as it sits on a low P/E and yields over 8%. It certainly grew very impressively last year and to be fair, this has been reflected in the share price, but only to the extent that it has kept up with events. It pays in dollars so the recently declared dividends are rising at the moment. It has made a strong start to its third quarter and on the current P/E, it is difficult to see much downside. It goes ex for its second interim and the special on the 8th October. It effectively pays quarterly, but they like to use the 1st, 2nd and 3rd interim with a final, so we use the companies terminology.

We will issue a further piece of research by the end of September, but we have been holding back due to the increased volatility in the markets in both the share indices and the dollar, making it difficult to write our dollar denominated piece with the dramatic day to day fluctuations affecting stocks like BHP Billiton, which we believe to be excellent value at anywhere near £17. Dividends will however increase with the dollar strength so with a stock like that it is a difficult balancing act.

Another company that has caught our eye as a result of interest rate speculation is Berkeley Group which has an enviable track record in the sector. It indicated a slowdown in its interim management statement, but surely we all saw that coming. It now trades on a forward P/E of under 10 and there is still the promise of outstanding returns from dividends over the next six years until 2021. Another 180 pence per share is due over the next 12 months to reach the 472p target by September 2015. It has fallen another 58p this morning as I write and is certainly one to consider as it approaches its 12 month low of 2054p (currently 2203p)



This email was originally sent on Friday 26 September 2014

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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