The FTSE 100 (FTSEINDICES: ^FTSE) put in another losing week last week, ending Friday 83 points down on 6,500, as improving economic indicators threaten to bring a more rapid end to stimulus than expected, and maybe even a prospect of rising interest rates. It’s now almost three months since the index of top UK shares reached that 13-year high of 6,876 points, and the signs suggest it’s not going to be back there for a little while yet.
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Royal Bank of Scotland
The bailed-out banks continue in their return to favour, with Royal Bank of Scotland Group (LSE: RBS) (NYSE: RBS.US) gaining 17.5p (5.3%) to end the week on 343p. The price was higher in January before 2013’s erratic ride set in, but it’s still up nearly 50% over the past 12 months and more than 70% over two years.
There’s a return to profit expected for the year to December, with forecasts putting the shares on a forward P/E of over 18. But current 2014 predictions drop that to just over 11, and dividends should start creeping back next year, so anyone in now for the long-haul may well do nicely out of it.
Shares in blighted security firm G4S (LSE: GFS) have been on a bit of a recovery since the start of July, regaining nearly 10% so far — and that includes a 14p (5.9%) gain last week to end on 249.5p. We’ll have first-half results on 28 August, which should give us a chance to assess the current City consensus which suggests a 6% fall in earnings per share (EPS) and puts the shares on a P/E of 12.5.
There’s a recovery in earnings predicted for 2014, dropping the P/E to about 11, and we also mustn’t forget G4S’s dividend which is approaching the 4% mark and is decently covered. Is G4S set for further gains? There’s still some significant debt to watch out for, but it’s worth further investigation.
The outlook for miners of useful metals is on the up, but we’ve also seen gains for diggers of the largely-pointless shiny yellow stuff too, with Fresnillo (LSE: FRES) picking up 137p (13%) to 1,172p last week — and that’s after an ex-dividend 4.9p too.
On 6 August, Fresnillo told us that first-half realised gold prices had fallen 10.6% and that silver was down 20.3%. Adjusted revenue dropped 14% too, with EPS down 60%. But presumably, the punters are warming to precious metals again, with the gold price having crept up around 6% over the past month.
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> Alan does not own any shares mentioned in this article.