FTSE 100 holds steady on UK jobs numbers

Liam Roche
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FTSE 100 holds steady on UK jobs numbers

After extending yesterday’s losses early on, the FTSE 100 is flat in the first hour of trading on Tuesday, sitting at 7,146.

“Some well-received corporate results helped balance out wider downbeat sentiment linked to the signs of a Chinese slowdown which emerged at the beginning of the week and the turmoil in Afghanistan,” says AJ Bell investment director Russ Mould.

UK jobs figures were slightly better than expected and didn’t contain anything to alert the market, while US retail sales are likely to draw focus later on.

“Investors will be looking for any signs of cracks in the American recovery in the retail numbers but will also alive to evidence of mounting inflationary pressures,” said Mould.

FTSE 100 Top Movers

BHP (6.18%), Just Eat (2.72%) and Scottish Mortgage Investment Trust (1.10%) are leading the way on the FTSE 100 during the morning session on Tuesday.

Making up the bottom three of the UK index is IAG (-2.54%), Kingfisher (-2.43%) and Whitbread (-2.15%).

Just Eat investors concerned following pre-tax loss

Liam Roche
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Just Eat investors concerned following pre-tax loss

Just Eat saw its market share rise by 10% in first half

Just Eat (LON:JET) saw the number of orders it received surge to 135m during the first half of 2021, an increase of 58m.

This was thanks in part to a sustained promotional push which also made an impact on the company’s balance sheet.

Just Eat made an underlying pre-tax loss in the UK of £60.6m compared to a £108m profit for the same period a year ago.

The food delivery company saw its market share rise by 10% as competition in the industry intensified as restaurants remained closed during lockdowns.

Commenting on Just Eat’s results, James Andrews, senior personal finance expert at money.co.uk, said: “Today’s news that Just Eat is expected to report profit loss will come as a further blow to the business, as its investors place increasing pressure on the sustainable future of the takeaway giant’s business model.”

“With shares struggling to return to anywhere near their October 2020 peak, some are predicting that share prices will tumble again. Shares fell by 9% after Just Eat’s company half-year earnings were released previously.”

The Just Eat share price is up by 2.72% during the morning session on Tuesday.

“With unease among the board, motions for a merger would hopefully allay some of the concern among Just Eat’s shareholders,” Andrews added. “This, along with careful investment in customer acquisition and expansion of the US strategy is likely what investors are looking out for to turn the group’s fortunes around. Whilst revenue grew by 53% compared to the same period last year, increased investment and spending has meant another profit loss for the company.”

“It’s also worth taking in the wider view of the sector, with Deliveroo’s shares soaring since it floated on the London Stock Exchange in March after interest and investment from international groups such as German company Delivery Hero.”

Plus500 sees annual revenue surpassing expectations despite profits falling

Liam Roche
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Plus500 sees annual revenue surpassing expectations despite profits falling

Plus500 received a boost from high levels of volatility in the first part of 2020

Plus500 (LON:PLUS), the online trading platform, forecast its yearly revenue to surpass analysts’ expectations, while confirming its profit for H1 fell from the surge seen during 2020.

Analysts’ expectations are for revenue to come in at $476.7m for the year ending in December 2021.

Plus500 confirmed annual revenue of $872.5m for last year and $354.5m for 2019.

Trading platforms received a boost from high levels of volatility in the first part of 2020, when the pandemic brought about a sell-off in the market. Companies such as Plus500 profited from the trend, particularly from the hype around ‘meme stocks‘.

Plus500 saw an increase in its number of active users from 328,409 in H1 202 to 333,940 in H1 of this year.

The London-listed firm says its expansion into futures and trading markets supported its recovery from the second half of last year. The company acquired Cunningham Commodities, a futures commission merchants, and CTS, a technology trading platform, to allow it to more easily make the transition.

“Plus500’s outstanding performance in H1 2021 was driven by the ability of our technology to capture the current market opportunities and to consistently provide high service levels to our customers,” said David Zruia, chief executive officer of Plus500.

“We are also delighted to have made significant progress in delivering on our vision to become a global multi-asset fintech group, with the acquisition of Cunningham and CTS, which brings access to the substantial futures and options on futures market in the US and the recent launch of the ‘Plus500 Invest’ share dealing platform in Europe. Both investments help us to diversify our range of products and further broaden our geographic footprint.”

“Future growth will be delivered through continued organic investments in our business, our technology and targeted bolt-on acquisitions to further expand our CFD offering, launch new trading products, introduce new financial products and deepen engagement with our customers. Having increased our expectations for the outlook for the Group, the Board is increasingly confident that Plus500 will continue to deliver further growth and consistent levels of cash generation over the medium to long term.”

Rejected Marlowe gets upgraded

Andrew Hore
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Rejected Marlowe gets upgraded

Marlowe (LON: MRL) had its bid approach to Restore (LON: RST) rejected by the latter’s management, but its regular acquisition activity is continuing to pay dividends and house broker Cenkos has upgraded its forecasts for the next two years.
The fire safety and compliance services provider has been built up via acquisitions and Restore would have been by far the biggest. Restore provides document storage and IT recycling services, so it has different businesses to Marlowe, although they are all business services.
There was no immediately obvious fit between the two companies, but Marlowe did h...

MTI Wireless broadens antenna base

Andrew Hore
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MTI Wireless broadens antenna base

Demand is building up for the antennas manufactured by MTI Wireless Edge (LON: MWE) and it is not just from 5G telecoms. Along with the continued strong demand for the company’s other businesses, this underpins strong growth for the next couple of years at least.  
Recent wins for space and naval uses show the strength of the technology. The naval deal with Ultra Electronics involves the design and supply of antennas worth $570,000 over a 20-month period. There should be further orders after that.
5G demand continues to grow. First half antennas revenues declined, but the profit contribut...

The best cities to invest in property in the UK

Liam Roche
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The best cities to invest in property in the UK

According to the insurer Aviva, 10% of UK adults between 35 and 45 years of age have made plans to buy an investment property within the next year.

However, rising house prices over recent months mean it has become increasingly expensive to be a landlord.

This also means it is more and more challenging to make a profit in certain regions once all costs and expenses are accounted for.

Investors may be better of researching the best areas across the UK in terms of property values and return on investment (ROI) if they want to become landlords, and make money.

New research has revealed the best cities in the UK to invest in property, with some areas offering up to £6,000 profit and nearly 3% ROI.

Coulters Property have compared average house prices and mortgage repayments with the average monthly rental prices, to determine the annual profits and ROI to reveal the best areas in the UK for property investment.

Top 10 UK cities with the best ROI for landlords

RankCityProfits Per Year (£)% ROI
1Preston £5,2562.98%
2Coventry £6,0332.74%
3Glasgow £4,8362.67%
4Swansea £4,4782.54%
5Dundee £3,9652.47%
6Manchester £5,0152.14%
7Paisley£2,7462.12%
8Leeds£4,3391.90%
9York£5,4051.85%
10Stoke-on-Trent£2,4811.73%

In the top spot, the Lancashire city of Preston offers the best return on investment. The average home sells for £176,378 while the average rental price is £981 PCM. This gives landlords a profit of £438 per month and £5,256 per year, giving an ROI of 2.98%.

Coming in second, Coventry offers an average ROI of 2.74% followed closely by Glasgow with an average ROI of 2.67%.

Scotland ranks very well in the top ten, with three Scottish areas appearing. Glasgow, Dundee and Paisley all offer an excellent return on investment for landlords.

Years ago, London was the front and centre of property portfolios, however, with prices in the capital so inflated, investors could be advised to look elsewhere.

Oriole Resources share price rises on update from Senegal

Liam Roche
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Oriole Resources share price rises on update from Senegal

Oriole Resources Share Price

The Oriole Resources share price (LON:ORR) is up by 9.98% on Monday as the gold and base metals explorer received some positive news from its project in Senegal. The bounce follows what has been a challenging past six months for the company which has seen the value of its stocks fall by 62.69% in that period of time. However, that is having taken into account a spike in February. Since the beginning of the year, the Oriole share price is up 8.16% at the time of writing.

Drilling Results

Drilling results from the Senala project in Senegal came as welcomed news to Oriole Resources and its investors today.

A key highlight was that the gold explorer intersected up to 70 metres grading 1.46 grammes per tonne of gold from Faré and 10.00 metres grading 1.69 grammes per tonne of gold from Madina Bafé.

Results for 38 holes from the RC programme at Faré have also been received and the AIM-listed company is currently undertaking its usual validation checks ahead of their release.

Oriole Resources CEO, Tim Livesey, said: “We are delighted to see the results from the latest exploration programmes carried out at the Senala licence by our partner IAMGOLD.”

“At Faré, results from the two diamond holes drilled to test the main Faré South anomaly support previous drilling carried out by our own team between 2013 and 2014. We hope that the information from these two confirmatory diamond intersections will take us one step closer to developing a maiden resource at Faré South which, based on the wide zones of near-surface gold mineralisation, we believe would lend itself well to open pit mining. Of note, this mineralisation is open at depth.”

“At Faré North and Faré Far South, there are two additional anomalies within the c.6.5km Faré trend, we look forward to sharing the results of the recent RC drilling programme shortly. These RC holes were targeting evidence of gold mineralisation identified previously by our own field work and by IAMGOLD’s air core drilling in 2020.”

“Continued positive results from Faré reconfirms our belief that this prospect, with its three distinct, yet neighbouring zones of mineralisation, has the opportunity to host a stand-alone resource and ultimately the potential to host a mine development.”

Oriole Resources

Oriole Resources is an AIM-listed exploration company, operating West Africa. It is focused on early-stage exploration in Cameroon (Bibemi, Wapouzé and Central Cameroon projects) and the more advanced Senala gold project in Senegal, where IAMGOLD has the option to spend US$8 million to earn a 70% interest.

The firm also has several interests and royalties in companies operating throughout Africa and Turkey that could deliver future cash flow, and it continues to assess new opportunities in both regions.

What should DIY investors look for when picking stocks?

Liam Roche
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0
What should DIY investors look for when picking stocks?

The number of DIY investors is on the rise as the internet provides information and opportunity aplenty for those seeking to grow their wealth. Information on businesses is as accessible as ever, and for those willing to put the hours in, success on the stock market is attainable for budding investors. This article, with insight from Laith Khalaf, head of investment analysis at AJ Bell, will examine some of the useful metrics and resources investors should be focused on when it comes to choosing where to put their money.

“Probably the biggest store of valuable information for investors lies in the results and reports presented by companies to the stock market. Institutional investors have no special treatment compared to private investors here,” said Khalaf.

The results are delivered to the market as a whole at the same time, and for UK stocks can be found on the London Stock Exchange website at 7am each day, or on companies’ investor relations websites.

The reports can be lengthy, however, and so it is important to know what to look out for.

Earnings Per Share

A key figure to look out for when a company releases its results is Earnings Per Share (EPS). EPS tells investors what profits the company is making for each share they hold.

“First, consider how it compares with prior periods to see if earnings are heading in the right direction, taking into account any one-off boosts or dents in profits that aren’t repeatable. The Chief Executive’s commentary which goes along with the results should alert you to such factors, particularly the ‘outlook’, which looks ahead to the following year,” said Khalaf.

“Second, divide the share price by the Earnings Per Share figure to derive the Price Earnings ratio, which is a measure of how expensive the shares are compared to the profits the company generates.”

Dividends

The dividend is another key figure in the reports and accounts for investors to mull. This is especially true for those seeking to gain passive income from their investments.

“It’s worth comparing the dividend per share to the earnings per share and considering how big a proportion of profits are being paid out as dividends,” said Khalaf.

“If it’s a high percentage, it may be a sign that dividend growth is likely to be limited, or in extreme cases that the dividend is unsustainable.”

Additionally, there are companies which prefer to reinvest profits over paying dividends. Major tech firms such as Amazon and Alphabet are known for this approach.

Profit Margins

Profit margins ultimately determine a company’s performance. A low profit margin suggests there is little room for error, while a higher profit margin means a company may be better to prepared to deal with any unexpected disruptions.

“Bear in mind some industries simply have low margins, for instance supermarkets and construction. While it may be less of an issue for the former as consumer demand for groceries is relatively stable, construction projects can often run late or over budget, wiping out profits and leading to losses – precisely what happened to Carillion before it collapsed,” according to Khalaf.

Debt

Investors should concern themselves with how much debt a company is carrying. When it comes to annual results, net debt is the key figure. “Again you can compare with previous periods to see if it’s heading in the wrong direction, which could be a warning sign,” said Khalaf.

Broker Forecasts and Ratings

Even if you are willing to put the time and effort in, it is still worth knowing what analysts’ opinions are on your investments. However, while analysts provide useful insights, they “tend to focus heavily on the next twelve months, whereas investors should be thinking about becoming an owner of a company for five to ten years or more”. It is important to use analysts’ insights to supplement your actions rather than to fully guide them.

Diversification

Diversification can help one manage their risk and lower the volatility of a portfolio. If all the companies you select are in the same country, or in the same industry, then your portfolio will be extremely vulnerable to a downturn in those areas. “If you’re going to be an active stock investor, you have to accept that you will get some things wrong, so protecting your portfolio from your own mistakes should always be a key consideration,” said Khalaf. Selecting diversified funds alongside your stock picks can allow investors to get the best of both worlds.

BHP looks set to sell-off its petroleum assets

Liam Roche
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BHP looks set to sell-off its petroleum assets

BHP confirms talks with Woodside

BHP confirmed it has commenced talks over the potential merger of its petroleum division with Woodside as the company looks to mark its exit from the oil and gas industry.

The FTSE 100 company said Woodside is one of many options on the table as it reviews its approach towards its petroleum business.

“While discussions between the parties are currently progressing, no agreement has been reached on any such transaction,” said BHP. “A further announcement will be made as and when appropriate.”

Woodside has a market value of $15bn, while analysts have estimated that BHP’s oil and gas unit is worth in the region of $13bn.

BHP’s decision to analyse its operations comes as major miners are coming under pressure to eliminate, or at least reduce, their exposure to fossil fuels.

However, “Mr Henry and the board have a tricky balancing act if they are to strike the right balance between shareholder satisfaction and shareholder value,” says AJ Bell Investment Director Russ Mould.

Management may also be taking the view that now is a good time to sell, after a rebound in the oil price from 2020’s lows, as the global economy and travel begin to regain some sort of traction.

“The board will also want to avoid the risk that they are left with ‘stranded’ assets, should long-term demand for oil and gas tail off more quickly than anticipated, and take further hits to the valuation of those assets on its balance sheet,” said Mould.

BHP has already sold its shale oil and gas fields in the USA to BP for $10.5 billion and committed to withdrawing from the production of thermal coal.

“BHP has six main product areas. They are iron ore, copper, petroleum, coal (both metallurgical and energy), nickel and potash but on the basis of the company’s mix of adjusted operating profit from the first half iron ore and copper are the materials that really count,” says Mould.

By exiting the oil business BHP could free up funds to increase its exposure in areas like battery metals and copper where demand from the ‘green’ economy is likely to be particularly robust.

Some investors may nevertheless be worried that BHP is selling at a bad time, owing to the uncertain economic outlook, forecasts in some quarters of $100-a-barrel oil in 2022, and the substantial number of oil and gas assets that are potentially up for sale. There is therefore the danger that BHP destroys shareholder value by selling too cheaply, especially if oil and gas fields prove to have a longer lifespan that many expect or hope.

The BHP share price is down by 1.83% during the morning session on Monday.

Resources sell-off sinks FTSE 100 on back of weak data from China

Liam Roche
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0
Resources sell-off sinks FTSE 100 on back of weak data from China

It’s a downbeat start to trading on Monday with the FTSE 100, down by 0.82% to 7,159.70, giving up some of last week’s gains.

“The oil and mining sectors helped drag down the index as BHP confirmed it was in talks over an exit from its petroleum division,” says AJ Bell investment director Russ Mould.

The commodities-related sell-off also followed weak data from China where retail sales slumped – raising questions over demand from the resources-hungry nation.

“The aerospace and defence sector was in focus thanks to the latest M&A news as Meggitt sanctioned a takeover deal from Parker Hannifin while Cobham and Ultra Electronics agreed terms on a merger,” said Mould.

“The downside for UK investors is yet another part of the market is being hollowed out, reducing the breadth and diversity on offer from London-listed shares.”

FTSE 100 Top Movers

London Stock Exchange (0.71%), Ocado Group (0.62%) and British Land (0.52%) are the three companies at the top of the index in which only a handful is in the green on Monday.

At the other end, Burberry (-2.98%), Glencore (-2.37%) and JD Sports (-2.27%) make up the bottom three on the FTSE 100.

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