Why National Grid plc, Fuller, Smith & Turner plc And Just Eat PLC Are Stellar Defensive Stars!

Royston Wild runs the rule over FTSE favourites National Grid plc (LON: NG), Fuller, Smith & Turner plc (LON: FSTA) and Just Eat PLC (LON: JE).

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I am looking at three low-risk London superstars.

National Grid

The utilities space is of course a traditional haven for those seeking reliable earnings, and subsequently chunky, dividend growth. This position has come under increasing scrutiny, however, as escalating operating costs and — in the case of electricity stocks, at least — the emergence of independent suppliers has eroded their customer bases and caused earnings to fall.

This is certainly the case with Centrica, for example, which is expected to follow last year’s dividend cut with another reduction in 2015. Still, I believe National Grid (LSE: NG) remains a secure bet for those seeking reliable returns — not only does its vertically-integrated model leave it immune to the regulatory pressures affecting the country’s major power suppliers, but of course the firm does not face the same competitive qualms as the rest of the sector.

With National Grid also benefitting from reduced outlay thanks to RIIO price controls in Britain, earnings are expected to edge 2% higher for the years ending March 2016 and 2017 respectively. These readings create very-attractive P/E ratings of 15.4 times and 15 times. And the company’s solid earnings visibility is expected to propel last year’s dividend to 43.7p per share for this year and 44.8p in 2017, yielding a terrific 4.8% and 4.9%.

Fuller, Smith & Turner

Pub operator Fuller, Smith & Turner (LSE: FSTA) furnished the market with yet another positive trading update in end-of-week trade, and the stock was last dealing 0.7% higher from Thursday’s close. The company advised that revenues revved 10% higher during April-September, to £177.7m, with like-for-like sales defying strong comparatives last year to advance 5.6%.

Subsequently pre-tax profit rose 16% during the period, to £21.2m. Demand for beer and ‘pub grub’ at Fuller, Smith & Turner is steadily rising thanks to its sage expansion programme, while improving spending power amongst drinkers is also playing into the company’s hands. And the London firm could enjoy further upside should the chancellor heed its calls for a further cut in beer duty in the Autumn statement.

Helped by the upcoming UEFA Euro 2016 football championships next year, the City expects the business to follow a 74% earnings rise in the year to March 2016 with a 5% advance in the following year. Subsequent P/E multiples of 21 times and 20.1 times may appear expensive at first glance, but I believe Fuller, Smith & Turner’s solid momentum justifies this premium.

Just Eat

Like the brewer, I believe takeaway provider Just Eat (LSE: JE) is a great defensive pick for savvy stock pickers — a cheeky pint and a pizza are popular luxuries regardless of the wider economic climate, after all.

And thanks to Just Eat’s massive investment in technology and marketing, I fully expect orders through the platform to continue taking off. The company advised this month that like-for-like sales exploded 48% during July-September, speeding up fractionally from the previous six months. And Just Eat’s focus on attracting mobile users means that 74% of all orders are now made on such devices, up from 69% a year ago.

Just Eat is predicted to print a 37% earnings surge in 2015, resulting in a hefty P/E ratio of 73.6 times. But this falls to a much-more appetising, if still elevated, multiple of 46.4 times for next year thanks to expectations of a 58% earnings uplift. But with the firm steadily building its virtual menu as well as expanding overseas, I believe this multiple should keep on toppling.

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.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Could the FTSE 100 be set to soar in 2024?

The FTSE 100 keeps threatening to go off on a growth spree. And weak sentiment keeps holding it back. But…

Read more »

Investing Articles

Is this FTSE 100 stalwart the perfect buy for my Stocks and Shares ISA?

As Shell considers leaving London for a New York listing. Stephen Wright wonders whether there’s an undervalued opportunity for his…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

3 things I’d do now to start buying shares

Christopher Ruane explains three steps he'd take to start buying shares for the very first time, if he'd never invested…

Read more »

Investing Articles

Investing £300 a month in FTSE shares could bag me £1,046 monthly passive income

Sumayya Mansoor explains how she’s looking to create an additional income stream through dividend-paying FTSE stocks to build wealth.

Read more »

Investing Articles

£10K to invest? Here’s how I’d turn that into £4,404 annual passive income

This Fool explains how using a £10K lump sum can turn into a passive income stream worth thousands for her…

Read more »

Investing Articles

1 magnificent FTSE 100 stock investors should consider buying

This Fool explains why this FTSE 100 stock is one for investors to seriously consider with its amazing brand power…

Read more »

Rainbow foil balloon of the number two on pink background
Investing For Beginners

2 under-the-radar FTSE 100 stocks under £2

Jon Smith identifies two FTSE 100 stocks that he believes are getting a lack of attention from some investors but…

Read more »

Investing Articles

£8,000 in savings? I’d use it as a start to aim for £30k a year in passive income

Here's how regular investing in the UK stock market, over the long term, could help us build up some nice…

Read more »