Today I am looking at three FTSE headline grabbers in Friday business.
Vodafone Group
With a much-awaited deal to solve Greece’s financial meltdown seemingly edging closer, shares in Vodafone (LSE: VOD) have understandably received a boost and the mobile operator was recently dealing 2.3% higher on the day. The firm’s reliance upon a strong eurozone is critical — Vodafone sources two-thirds of total EBITDA from Europe, so Athens’ newfound appetite to avert a continental crisis is great news.
The telecoms play has seen conditions improve steadily in Europe as consumer spending has picked up, while moves into the red-hot ‘quad play’ entertainment space have also turbocharged Vodafone’s sales outlook. When you factor in galloping data demand in developing markets — organic service revenues from the Africa, the Middle East and Asia Pacific region leapt 5.8% last year — in my opinion the London business emerges as a great growth pick.
Indeed, the City expects a 1% earnings uptick for the 12 months concluding March 2016 to advance to 15% in the following year. While it is true these figures produce hefty P/E multiples of 44.1 times and 36.8 times respectively, I believe Vodafone’s generous dividend policy more than offsets these expensive values — a prospective payment of 11.7p through to the end of 2017 results in a huge 5.1% yield.
ReNeuron Group
Shares in biotech play ReNeuron (LSE: RENE) have gone gangbusters in end-of-week trading following news of a huge cash injection, and the firm was recently changing hands 18% higher. The stem cell researchers announced that they had raised £68.4m in a bid to fast-track its product to market, with superstar investor Neil Woodford giving ReNeuron the seal of approval by hiking his stake from just over a quarter to 36%.
The Guildford firm announced that the capital will be used to fund “core cell-based therapeutic programmes and new exosome nanomedicine programme in oncology” through to the first half of 2019, giving plenty of wiggle room in what is obviously a capex-heavy industry. And ReNeuron added that the funds — which it describes as the largest such investment in cell therapy so far this year — should push its stroke and retinitis pigmentosa programmes through to the market authorisation application stage.
Naturally the business of healthcare is a lumpy and expensive one, and as a result ReNeuron also announced today it had made a £10.3m pre-tax loss in the year to March 2015. But with several of its clinical trials making excellent headway, and the company now having the financial clout to really get its R&D operations trucking, I believe ReNeuron could explode higher in the coming years.
Zotefoams
Cellular material producer Zotefoams (LSE: ZTF) also released its latest trading update in Friday business, although prices have so far failed to react and the stock was recently flat on the day. The Croydon company — which manufactures cross-linked block foams across a variety of applications, from packaging and toys through to clothing — announced that revenues are expected to have risen 8% in January-June.
In particular, sales at its MuCell Extrusion technology licensing arm are anticipated to have leapt 40% higher during the period, while revenues at its High-Performance Products division is predicted to have advanced 20%. With raw material prices also declining, the City expects improving demand to propel earnings 14% higher this year, and by another 19% in 2016.
These numbers create high P/E ratios of 27.7 times and 23.2 times for 2015 and 2016, however, while projected dividends of 5.7p and 6p for these years do not create eye-popping value, either — yields ring in at just 1.7% and 1.8% for these years. But beyond the medium term, Zotefoams’ market-leading expertise in niche products could make it a potentially barnstorming pick should demand remain resilient, helped by a planned expansions in Kentucky to boost manufacturing capacity.
