Beginners’ Portfolio: Vodafone Group plc And Tesco PLC Are Looking Good

We catch up with Vodafone Group plc (LON: VOD), Tesco PLC (LON: TSCO) and GlaxoSmithKline plc (LON: GSK).

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The Beginners’ Portfolio is a virtual portfolio, which is run as if based on real money with all costs, spreads and dividends accounted for.

vodafoneVodafone (LSE: VOD) (NASDAQ: VOD.US) has been good to the Beginners’ Portfolio, providing us with a share price gain of 36% from our purchase price of 168.5p to today’s 229p — and we’ve had a further 12% in dividends since we started, too.

Those dividends include a 3.53p-per-share interim payment for the six months to 30 September, after Vodafone reported a 3.2% fall in revenue to £22,034m with a 0.5% rise in organic operating profit — but a 2.6% fall in adjusted earnings per share to 7.85p.

The future?

That might sound disappointing, but it was pretty much in line with expectations — there’s a flat year for earnings forecast for 2014 followed by a fall in 2015.

The interim dividend was increased by 8% and the company also announced a planned 11p-per-share for the full year for a similar 8% rise. That assuages fears, at least for now, raised by Vodafone’s current policy of promising nothing more than maintaining dividends year-on-year.

With Vodafone shares on a forward P/E for 2015 of over 19 after falling earnings are forecast, and with the share price undoubtedly boosted by the rumours of an AT&T bid, should we be selling? I’ll be pondering that question soon.

Supermarket update

TescoMeanwhile, Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) has completed the sale of the bulk of its holding in the American Fresh & Easy chain to YFE Holdings, thus ending that unsuccessful venture into the USA. Overseas expansion is great when it goes well, as Tesco has shown with a number of Asian ventures — it currently gets around 18% of its turnover from that part of the world. But knowing when to cut and run is a part of it, and I think Tesco is competent at that and I’m happy this saga has come to a close.

But Tesco shares have not been doing well of late, being bounced a bit by Sainsbury‘s recent capture of 16.8% of the UK’s groceries market to climb to its highest share in a decade. The Tesco price is now down 8.2% since its recent high in September, to 347p, and up just 14% since we added them 18 months ago — the FTSE is up 26% since then, though we have had around another 6% in dividends from Tesco.

Pharma as well

GlaxoSmithKlineWe’ve had a couple of bits of news from GlaxoSmithKline (LSE: GSK) this month, with the pharmaceuticals giant having completed the sale of some of its shares in Aspen Pharmacare Holdings, South Africa’s largest drugs firm, for 7,059m rand (approximately £430m). After the sale, Glaxo still holds 12.4% of Aspen.

Glaxo also got some good news concerning its HIV-treatment Tivicay (dolutegravir), with the European Medicines Agency’s Committee for Medicinal Products for Human Use offering a positive opinion on authorization for the drug. It’s a step closer to the market now.

The share price has slipped a bit since the summer, but at 1,651p it’s still up more than 20% over 12 months — but it’s only up 12% since we bought in June 2012.

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.

> Alan does not own any shares mentioned in this article. The Motley Fool owns shares in Tesco and has recommended shares in Vodafone.

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