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The forward look from The Share Centre w/c 3rd October 2011
Nick Raynor, investment adviser at The Share Centre, gives his thoughts on what to expect from companies announcing results w/c 3 October 2011.
Tuesday
Wolseley sold off two of its French businesses back in July for £310m – many thought this was a fair price and the proceeds were used to pay off debt. There has been no update since this development but we hope further in-roads to the company’s debt levels have been made and signs of improvement are on the way. Several brokers are very positive about Wolseley; however we will hold judgement until we have had a chance to look at the results.
We currently list Wolseley as a HOLD
Wednesday
Tesco has made £500m of price cuts recently in an effort to win even more of its rivals’ customers. This will undoubtedly place pressure on margins, especially on the UK business. Tesco has also admitted defeat in Japan and announced it has pulled out of the region. Price wars are the main concern for us over the coming months and they will no doubt continue nearer Christmas. We feel Tesco is still the most solid of the retailers and it is worth having a closer look at the results.
We currently list Tesco as a BUY
As price wars will be the name of the game until after Christmas any improvement Sainsburys has made during the first half of the year will be welcomed. However, wining market share from Tesco has always proven to be a very hard task and we do not expect any dents to have been made so far this year.
We currently list Sainsburys as a HOLD
The late Indian summer we are having could be beneficial for Martsons as more customers take advantage of the warmer weather and enjoy a drink in the sun. Trading so far this year has been good and we expect this to continue. The yield is also attractive for investors although we doubt that there will be any mention of it in this update.
We currently list Marstons as a BUY
Thursday
The half year results issued in August were very positive and it was pleasing to see new contracts being signed, especially from its overseas operations, particularly in Canada. We expect much more to come from Carillion and more contract wins should be announced in this update. The order book is continuing to grow as is Carillions overseas exposure. This is very pleasing and Carillion remains one of our favoured ‘buys’ within the support service sector.
We currently list Carillion as a BUY
Economic Diary
Economic announcements for the w/c 3 October 2011
3 October manufacturing PMIs in the UK CIPS/Markit and in the Eurozone Markit, and 5 October for services
The 3rd and 5th of this month will see the latest Purchasing Managers Indices PMIs for manufacturing and then services. Last month saw the PMI for UK manufacturing fall from 49.4 to 49. Any score below 50 is consistent with contraction, and the index has been below 50 since May. PMIs relating to the Eurozone and the US were equally worrisome.
The CIPS/Markit index measuring services in the UK fell from 55.4 to 51.1. And in the Eurozone, the Business Activity Index for services fell to 51.5 in August, a two-year low, while its Composite Output Index dropped to 50.7, again just 0.8 per percentage points above a level which suggests recession.
6 October, Governing Council meeting of the ECB in Berlin and Monetary Policy Committee Meeting and Announcement – Bank of England
Given recent events, it will come as something of a surprise if the European Central Bank does not decrease the rate of interest from the current 1.5 per cent. At the same time, the chances of the Bank of England announcing more quantitative easing have risen sharply. Today may be the day when both central banks start a new round of monetary easing and stimulus.
Other economic announcements include:
3 October
CBI/PwC Financial Services Survey published – CBI
Manufacturing PMI UK – CIPS/Markit
Various Manufacturing PMIs eurozone – Markit
Manufacturing ISM Report On Business – ISM
Record of the Interim Financial Policy Committee meeting held on 20 September – Bank of England
5 October
UK Services PMIs, September – CIPS/Markit
Eurozone Services PMIs, September – Markit
Non-Manufacturing ISM Report On Business – ISM
EU, National accounts GDP, 3rd estimate of GDP Q2, – Eurostat
United Kingdom Economic Accounts , Q2 2011 – ONS
Business Investment, Q2 2011 Results – ONS
Balance of Payments, 2nd quarter 2011 – ONS
Economic Review, September 2011 – ONS
6 October
Governing Council meeting of the ECB in Berlin – ECB
Monetary Policy Committee Meeting and Announcement – Bank of England
Labour Productivity, Q2 2011 – ONS
Index of Services, July 2011 – ONS
7 October
Profitability of UK Companies, Q2 2011 – ONS
Producer Price Index, September 2011 – ONS
THIS DATA IS PROVIDED BY THE SHARE CENTRE. THIS IS NOT INTENDED TO CONSTITUTE AN OFFER OR AGREEMENT TO BUY OR SELL INVESTMENTS.
Risk Warnings:
Investing in general, and the products and services mentioned above may not be suitable for all: if in doubt, individuals should seek independent financial advice. The value of investments and the income from them can go down as well as up and investors may not get back their original investment. Past performance is not a reliable indicator of future performance.
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