3 FTSE 100 Shares For The Week Ahead: CRH PLC, Glencore Xstrata PLC and John Wood Group PLC

We’ll have interims from CRH PLC (LSE: CRH), Glencore Xstrata PLC (LON: GLEN) and John Wood Group PLC (LON: WG).

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Earnings reports from FTSE 100 companies are starting to drop off now, as the interim season for firms with December year-ends draws to a close. But there’s something of a last-minute rush coming next week, as a few stragglers all get their interim reports out. And for a change, we have an unusually busy Tuesday — Thursday is usually the big day for company results:

CRH, Tuesday 20 August

Building materials supplier CRH (LSE: CRH) has had a very erratic few years earnings-wise, but things should be starting to stabilise now with a 5% fall in earnings per share (EPS) forecast for the year to December 2013 — and there’s a rise of 38% penciled in for 2014.

At a price of 1,460p, the shares are on a forward P/E of around 21 at the moment, so there’s clearly some growth expected now. But how realistic is it?

Interim results due on Tuesday should give us some pointers, but judging by a first-half development strategy update released in July, the way forward is through acquisition and investment. As well as development spend of around €470m, CRH made 12 transactions in the Americas totalling €178m, and five in Europe for €58m.

Since then, CRH has appointed a new chief executive, Albert Manifold, who is set to take the helm on 1 January 2014 after current boss Myles Lee retires. And we’ve had news of yet another acquisition, this time of a cement business in India. Things are certainly changing at CRH, but with all these acquisitions going on I’d be looking at the firm’s debt situation quite carefully.

Glencore Xstrata, Tuesday 20 August

We’ll also have interims from the FTSE’s biggest miner, Glencore Xstrata (LSE: GLEN), at a time when upbeat tidings from the Chinese economy are giving the sector a boost. Still, depressed commodities prices have been pushing profits down and we should see a fall over the first-half period.

But we did have good news on 14 August in the form of a half-year production report. Own-sourced copper production rose by 20% to 673,400 tonnes, with African production up 41%. Own-sourced production of zinc was “modestly down” by 3%, though output from Australia is rising, and the company produced 14% more gold. Coal production was also up, by 22% to 9.6 million tonnes.

Forecasts for a 30% fall in EPS for the full year put the 307p shares on a forward P/E of 15, but those earnings are driven by the lowest metals prices we’ve seen for a while and increasing future demand must surely reverse the decline. In the meantime, there’s a well-covered dividend yield of over 3% to keep investors going.

John Wood Group, Tuesday 20 August

John Wood Group (LSE: WG), the oil and gas engineering support firm, has rewarded investors modestly over the past year, with a share-price rise of around 10% to 897p. Dividends have been lower than average too, at around 1.5%. But after a rise in EPS of nearly 75% for the year to December 2012,  the City is expecting to see 40% growth this year, putting the shares on a P/E of 14 — and 12% growth suggested for 2014 would drop that multiple to around 12.

And things are looking good, with the group’s recent retention of its lucrative North Sea support contract with Dana Petroleum underpinning an optimistic outlook.

John Wood is a great example of the kind of ‘picks and shovels’ business that I like, and I’ll be paying attention to Tuesday’s interim figures.

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> Alan does not own any shares mentioned in this article.

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.

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