Should You Buy GlaxoSmithKline plc, AstraZeneca plc & Hargreaves Lansdown plc Ahead Of The Results This Week?

Dave Sullivan digs deeper into prospects for GlaxoSmithKline plc (LON: GSK), AstraZeneca plc (LON: AZN) and Hargreaves Lansdown plc (LON: HL) ahead of their results this week.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I don’t know about you, but I for one am glad to see the back of January. Despite my personal portfolio’s small-cap growth-oriented construction, I’ve been along for the ride on the turbulent market roller coaster.

That said, the volatility has, in my opinion opened some interesting opportunities. However, as we head into February investors will be updated with both interim and preliminary results from a lot of companies, which could well impact on the share price in either direction.

A quick glance at the 12-month chart shows all three shares under review comfortably outperforming the FTSE 100.

But once we close that chart to a month view, a slightly different picture emerges with only one company, GlaxoSmithKline (LSE: GSK) outperforming the blue-chip index.

Defying the bears?

I’ve been watching shares in pharma giant GlaxoSmithKline for a while now. As I’ve written before, I’ve been conscious of the level of dividend cover falling to less than 1 for the year to December 2015.

However, the market has been marking the shares higher of late, perhaps due to their perceived safe-haven appeal, perhaps due to the possibility that investors are beginning to believe the company’s prospects will improve as its business is reshaped following the deal with Novartis.

Currently, I’m still cautious and will wait for the results as analysts have been marking down their EPS estimates over the last one-month and three-months, albeit by only 1 penny per share, according to data from Stockopedia.

Back on the up?

On the other side of the coin, or brokers’ forecasts to be more precise, we’ve seen earnings estimates rise by around $22m at sector peer Astrazeneca (LSE: AZN). This puts the shares on a 12-month rolling forecast P/E of just under 16 times and the shares are set to yield in excess of 4%.

In addition, it’s pleasing to see that the level of dividend cover is beginning to rise too, with dividend cover expected to increase to 1.55 times for the year ending December 2015 – much safer than the less-than-one-times cover for the previous financial year.

As we can see, the shares have more or less tracked the index over the last month, which leaves me thinking that they’re in need of a catalyst to get them moving in the right direction. Whether this will arrive with the full-year results is yet to be seen.

Paying up for quality?

It’s hard to argue with the returns over the last 12 months delivered to shareholders in investment management firm Hargreaves Lansdown (LSE: HL). The shares have significantly outperformed the index and rightly so in my view.

As I’ve written before, it’s rare to see such quality in a mature blue-chip company. Indeed it’s the quality on offer here that you could argue justifies the eye-watering 32 times forecast earnings price tag that the shares attract.

Despite the quality here, investors may well see the shares hit by the postponement of the Lloyds Banking Group public share sale that was specifically mentioned by CEO Ian Gorham when the company updated the market back in October 2015. Indeed, broker forecasts have been sliding for some time now, and there’s room for some further downgrades should the market fall further. Despite this, the dividend is expected to grow again this year, giving a forecast yield of just under 3%

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca, GlaxoSmithKline, and Hargreaves Lansdown. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »