November can be a gloomy month but you’ll be happy if you hold shares in AstraZeneca (LSE: AZN) (NYSE: AZN.US) and Vodafone Group (LSE: VOD) (NYSE: VOD.US).
These two FTSE 100 giants have been real winter warmers, their shares up 9% and 16% respectively over the last month.
So can the party continue, or is the hangover is about to kick in?
Wisdom Of AstraZeneca
AstraZeneca’s strong run followed impressive Q3 results, which saw group revenue rise 5% to $6.54bn. Emerging markets led the way, with 12% sales growth, and a storming 22% in China.
Management has an ambitious long-term plan, targeting strong and consistent revenue growth from 2017, with revenues topping $45bn by 2023.
Just 18 months ago, I reckoned the only compelling reason to buy AstraZeneca was its yield, nudging 6% at the time. It was battling against expiring patents and a failing drugs pipeline, while revenues were plunging as it lost exclusive rights to key treatments. Management was shedding staff to make the figures look better.
It’s a different story today. AstraZeneca now has 121 projects in its pipeline, with 107 in the clinical phase of development. Its share price has recovered nicely since Pfizer’s bid was kicked back, and if you like buying on takeover speculation, Pfizer may give it another go.
There are threats, as cuts in government spending could hit drug sales, while earnings per share have been falling, as AstraZeneca pours money into new blockbuster drugs.
But at a reasonable 14.1 times earnings and yielding 3.8%, AstraZeneca is more than a November wonder.
Vodafone Rings In
Vodafone’s recent results also helped fend off the winter blues, despite a 10% drop in half-year earnings to £5.9bn.
Investors were cheered by its full-year guidance, which predicted a slight rise in profits to between £11.4bn and £11.9bn.
Data services continue to rise strongly, with a 59% rise in European 4G coverage, and 10.5 million 4G customers across the group. There is plenty of scope for future growth, as its networks roll out across India.
But it is competing in a tough market, especially in stricken Europe, where half-year service revenues fell 6.5%.
Despite its blistering November, the Vodafone share price is down 2% over the past 12 months. I reckon its future share price growth prospects are limited, as they have been for years.
But its meaty dividend, which currently yields 4.9%, remains almost impossible to resist.
