Stocks to watch in October
Everything seems to have gone well for Bellway, our fourth-biggest house builder, in the year to July. A recent trading update from chief executive John Watson indicated pre-tax profits would top the £100 million mark (£67.2 million last time) reflecting a 6.2% rise in the number of house sales on better margins and higher prices. Watson describes the market as 'resilient' with an order book now worth £441 million.
Bellway splashed out more than £300 million on expanding the land bank last year to lay the groundwork for more growth. Analysts look for profits of £120 million this year, but the market remains cautious.
We are still a long way from the boom times of 2007 when the company made a satisfying £234 million profit. We drew attention to the shares in this column when they were selling for 579.5p two years ago. At 805.5p there is scope for further progress.
Commercial flooring manufacturer James Halstead said at the end of July it is expecting another record set of results in October. The shares have risen almost 50% this year on the prospect of profits reaching £42.4 million against £38.5 million last time. Two thirds of Halstead's sales are overseas which helped it grow during the recession. The dividend record is impressive.
Last year, for the 35th consecutive year, the dividend was raised from 13.375p to 14.3p and this year another increase is in prospect after an 11% rise to 5p at the half-year stage.
Given the gloomy global background, the sales growth Halstead achieved at the half year in some of its markets was remarkable - 25% up in France and Scandinavia - and even the UK managed record sales.
Analysts expect further growth this year and profits of £44.6 million have been projected. The dividend, expected to be 15.7p for the year just ended, could reach 16.8p in the current year.
Imperial Innovations listed on AIM in 2006 to become the first university-owned company in the UK with a stock market quote. Through its founders at Imperial College in London and its connections at other university research groups, it has spent millions backing new ideas to create 80 technology companies in healthcare, recycling, communications and electronics and has a further £100 million to invest.
The shares hit a peak of 550p at the start of 2011 but have since yo-yoed between 268p and 375p. They are hard to value objectively. The latest portfolio valuation is £117 million with net assets put at £225 million. So the current market value of £314 million looks optimistic. The market expects a modest rise in profits from £573,000 to £682,000 for the year just ended, but don't expect dividends any time soon.
Avanti Communications has been one of the darlings of Aim this year with the shares up from 241p to 393p on the back of growth hopes for its superfast broadband service using satellites.
Avanti founder and chief executive David Williams reckons satellite technology will cut broadband costs by 75%. A second satellite, with a third planned, has just been successfully launched to provide high-speed data capacity across Africa and the Middle East to dovetail with the first satellite now covering Europe.
Optimism about prospects abounds at broker Jefferies, which has set a target of 600p for the shares. The group is rapidly building a customer base of telecom companies that supply Avanti's services to a broad range of government, commercial and residential customers. Williams is targeting emerging markets for the bulk of his business and eventually expects to achieve a very sizeable export business.
Near term, the prospect is for a loss of £9.16 million for the year to June, with hopes for a small profit this year. M&G and Caledonia Investments hold more than 30% of the shares and so are looking for big rewards over the long term.
YouGov, the pollster and online market research outfit, is expected to deliver a dramatic increase in profits next month after chief executive Stephan Shakespeare confirmed in early August that his group had delivered a strong performance. Analysts are expecting a profit of around £5.825 million pre-tax against only £411,000 last time. In the current year profits might reach as much as £7 million.
The company fell into the red during the recession but is making a healthy recovery helped by success in overseas markets. The shares nearly hit 200p in 2008 but have been as low as 43.63p early this year. They now change hands at 75.5p and should continue to progress.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.