Friday Email: 30 January 2015
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
The FTSE 100 is trading close to the top of its trading range but still finding very strong resistance at around the 6850 level, which was breached briefly on Tuesday as a high of 6860 was reached. Since then we have fallen back to 6810. However, January has been a good month and many believe that it sets the tone for the year as a whole. Whilst we will no doubt have some scares on the way, a decent outcome to 2015 looks on the cards.
The past week saw the dividend bandwagon roll on with dividend increases from all of the companies that we cover. It was a quiet week and we are winding up now for all of those companies with a December year end. A few more quiet-ish weeks and then we will be very very busy. Crest Nicholson, PZ Cussons, Renishaw, Rank and Diageo all increased their dividends this past week. Royal Dutch Shell did not increase in dollar terms but Euro holders had a 10% boost since the last quarter; Sterling holders had a 5% boost from the strong dollar.
The week ahead is busier and sees final results from ARM Holdings, BP, Ocado, St Modwen Propoerties, Astra Zeneca, Glaxo and Smith & Nephew, with interim results from Alumasc, Hargreaves Lansdown and Sky.
The subject of our latest research, Bellway has performed well since publication and is now up about a quid and on the rise again this morning.
Old favourite Easyjet continues to prosper and so it will with oil prices keeping very low. Lets hope that they are putting their hedges in for as far out as they can possibly go as this will lock in profitability. It rose 109 pence to an all time high of 1898p yesterday and it is trading slightly up this morning. It now looks fair value on a PE of over 15x. Oil companies are cutting their spending so rapidly at the moment that the supply / demand imbalance will be corrected some time this year and will inevitably go the other way at some point.
The sorry tale of Afren continues to dismay investors and it is a certainty that they are going to have to accept hefty losses. It is hard to believe that they could have destroyed so much shareholder value in such a short space of time. Truly outrageous. The mangement team that triggered the fall all sold the bulk of their shares before the bung scandal broke. No comment.
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: 23 January 2015
The FTSE 100 has been very strong in the past week with further good gains expected today. According to the futures this morning, we will be challenging the resistant 6850 mark for the first time in quite a while. Any sign of a pick up in the natural resources sector will see the FTSE 100 fly through the 7000 level. The latest spur for the market is the rumoured 1.1 trillion Euro QE move by the ECB. Having looked over the pond at the apparent success of QE, it looks like the EU have decided that it might have some credence, especially in the face of the spectre of deflation that has been brought to the fore by the very rapid fall in the price of oil. A major cost to all firms has plummetted and we are now starting to see related industries such as gas announcing price cuts. People are starting to talk about oil prices staying low for 3 years (BP). Personally, I am not convinced that this will happen at all. The markets have driven the price of oil far too low, very quickly and when it becomes apparent that production has fallen, which it inevitably will (Enquest announced a 40% reduction in its capital spend for the next 12 months this morning and Afren said similar things earlier in the week. It is also interesting that Enquest's lenders were happy to relax covenants on their debts), then the price of oil will start to rise.
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