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Share of the Week from The Share Centre 28 Nov 2011
United Utilities is upgraded to our ‘buy’ list and Graham Spooner, investment research analyst at The Share Centre, picks the company as his share of the week. Here’s why;
“United Utilities issued interim results in November that were in line with expectations. Having sold off other divisions, the company is now focusing on its water business and is planning to invest £700m this year on repairing and replacing pipes and reservoirs.
“As price rises are linked to the retail price index, United Utilities is able to promise growing dividends by 2 percentage points above inflation until 2015, attracting income seeking investors. The bid for Northumbrian Water earlier in the year also gave the sector a boost.
“However, the industry is regulated by Ofwat, which can create uncertainty for investors, who should note a government white paper on the industry is expected soon. United Utilities’ believes it is well positioned in the current regulatory period, with its ongoing efficiency plans and comparatively low cost group debt.
“Uncertainty in the market continues as the economic outlook remains gloomy and investors are attracted to the sector’s defensive qualities. Following the recent fall off in the market and increasing investor demand for high yielding companies, we now recommend income seekers to ‘buy’ United Utilities.”
THIS DATA IS PROVIDED BY THE SHARE CENTRE. THIS IS NOT INTENDED TO CONSTITUTE AN OFFER OR AGREEMENT TO BUY OR SELL INVESTMENTS.
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Back2011-11-28 17:18:42 © Moneyextra.com