Why I Would Buy Big Yellow Group plc, Finsbury Food Group plc And AstraZeneca plc

Royston Wild lays out the investment case for Big Yellow Group plc (LON: BYG), Finsbury Food Group plc (LON: FIF) and AstraZeneca plc (LON: AZN).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Today I am looking at three Thursday headline makers that stock pickers should seriously consider.

Big Yellow Group

Storage house Big Yellow Group (LSE: BYG) greeted the market with yet another positive update in Thursday business, in turn pushing shares in the business 1.7% higher on the day. The Bagshot business saw like-for-like revenues leap 10% during April-June, to £20.7m, and its underlying occupancy rate jumped to 76.3% from 71.2% during the corresponding 2014 period.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

And Big Yellow said that it expects this occupancy rate to leap another three to four percentage points during the current year, a projection I fully expect the firm to realise as Britons’ hoarding culture — boosted by improving spending power — fuels the need for extra space. This view is shared by the City, and earnings growth of 12% and 13% are pencilled in for the years concluding March 2016 and 2017 correspondingly.

Although Big Yellow sports slightly-elevated P/E ratios of 21.5 times and 19.2 times for these years, I expect these to continue collapsing in line with strong demand. And in my opinion projected dividends of 24.5p per share for 2016 and 27.6p for 2017 more than offsets these multiples, creating chunky yields of 3.8% and 4.2%.

Finsbury Food Group

Like Big Yellow, Finsbury Food Group (LSE: FIF) also cheered investors with a bubbly trading update during today’s session and was consequently dealing 6.3% higher. The stock has gained 54% since the turn of the year, propelling the business to current record highs of 92.5p per share at the current time. But I reckon further hefty gains can be expected.

Finsbury Foods announced that total sales jumped 45.8% during the 12 months concluding June 2015, helped by the recent acquisition of Fletchers. Consequently the specialty baker said it expects to exceed current profit expectations. So current City forecasts of a 10% earnings decline for the year could be set for a significant upgrade given today’s release, while predictions of a 27% increase in the current period could also receive a shot in the arm.

I believe that Finsbury Foods offers brilliant value for money, the caterer boasting an ultra-cheap earnings multiple of 9.8 for 2016 — any reading below 10 times is widely considered too good to pass on. When you factor in a projected dividend of 2.8p per share, too, producing a meaty 3.4% yield, I believe the food manufacturer is a hugely appetising stock pick.

AstraZeneca

Unlike its FTSE compatriots, however, AstraZeneca (LSE: AZN) was recently dealing 0.4% lower in Thursday’s session and this extends the broad downtrend seen during the past few months. However, I believe this current weakness — AstraZeneca has shed 11% since the middle of April — makes the business a bargain at the current time, even though the problem of exclusivity losses looks set to continue.

The number crunchers expect the London firm to arrest the heavy earnings declines of recent years in 2015 with a bottom-line stagnation, although a fresh 3% fall is predicted for 2016. But I am convinced AstraZeneca’s reinvigorated R&D pipeline — combined with surging healthcare demand from emerging regions — makes the business a terrific long-term growth pick. The business received FDA approval for its Iressa lung cancer drug just this week, and AstraZeneca plans to release a further six oncology-related products during the next five years alone.

I consider a prospective P/E multiple of 15.5 times decent value given these hot product prospects, while juicy dividend projections around 285 US cents for 2015 and 2016 cement the investment case in my opinion — these forecasts create a produce market-beating yield of 4.3%.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

How I’d apply the Warren Buffett method to buying shares

Learning from billionaire investor Warren Buffett, our writer explains his own approach to investing in shares for his portfolio.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

This dividend share yields under 1% — but I’d still buy it

This dividend share has a low yield. So why would our writer consider adding it to his income portfolio?

Read more »

Young lady working from home office during coronavirus pandemic.
Investing Articles

Looking for a good share to buy? Here’s how I do it

Here are two approaches our writer uses when hunting for a good share to buy for his portfolio to aim…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

One cheap FTSE 100 share I’d buy for a new bull market

This FTSE 100 share is unloved and starting to look seriously cheap, says Roland Head.

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

How I’d invest £500 in UK shares in 2022

Investing a small amount of capital in UK shares can result in high commission costs. Zaven Boyrazian explains how to…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 battered FTSE dividend stocks to buy in July!

I'm still searching the FTSE 100 for the best bargains to buy. I think these two big dividend shares are…

Read more »

Woman pulling baffled face
Investing Articles

Can I trust Lloyds’ 6.1% dividend yield?

The Lloyds' share price has sunk in 2022, causing the bank's dividend yield to leap. But can I really trust…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 top stocks to buy before the market rebounds

Edward Sheldon highlights three beaten-up stocks he'd buy before global stock markets stage a recovery from their 2022 declines.

Read more »