Are GlaxoSmithKline plc, Ashmore Group plc & Henderson Group Plc Today’s Barnstorming Buys?

Royston Wild takes a look at London headline-makers GlaxoSmithKline plc (LON: GSK), Ashmore Group plc (LON: ASHM) and Henderson Group Plc (LON: HGG).

| 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’m considering the investment case for three FTSE-listed movers.

Asset manager marches lower

Emerging market-focused Ashmore Group (LSE: ASHM) has seen its share price move steadily lower in recent times. The stock is now dealing at a 44% discount to levels seen a year ago, the shares conceding a further 5% on Thursday following a worrying trading update.

Ashmore saw assets under management slip 16% between July and December, to $49.4bn, the result of chunky net outflows of $5.7bn and negative investment performance of $3.8bn. And worryingly, the business advised that “sentiment is likely to continue to be affected by the lower oil price and ongoing concerns about slowing global growth, particularly with respect to China.”

In this environment, the City expects Ashmore to endure a 23% earnings dip in the year to June 2016, although this still creates a reasonable P/E rating of 16.1 times.

It’s in the dividend stakes where the investment managers really stand out from the crowd, however. A projected payment of 17p per share creates a storming 6.8% yield, obliterating the FTSE 100 average around 3.5%.

Still, I reckon the risks over at Ashmore outweigh the potential rewards at the present time, and I reckon a combination of developing market weakness and renewed US dollar strength is likely to keep hitting fund performance.

Financial favourite urges caution

Fellow asset manager Henderson Group (LSE: HGG) also saw its share price rattle lower from Wednesday’s close, the business last dealing 6% lower on the day.

This is despite the company releasing broadly-positive full-year results. Henderson saw net retail inflows clock in at a record £8.5bn in 2015, a result that propelled total assets under management 13% higher to £92bn.

The number crunchers expect Henderson to record a 5% earnings advance in 2016, slowing down from the double-digit advances of previous years but still creating a decent-enough P/E multiple of 15.9 times. And an estimated dividend of 11.4p per share produces a meaty 3.8% yield.

But like Ashmore, shaky investor appetite could throw up troubles further down the line at Henderson, prompting the firm to announce “we will review our short-term plans if difficult market conditions persist.” While the firm’s global expansion drive is currently paying off handsomely, I believe difficult trading conditions could easily throw Henderson off course.

Drugs giant ready to rock

In times of extreme macroeconomic turbulence such as these, I believe medicines mammoth GlaxoSmithKline (LSE: GSK) could prove a canny stock selection for defensively-minded investors.

The Brentford firm hasn’t proved immune to the wider tsunami smacking global indices in Thursday trade however, and the business was last down 0.7% in Thursday’s session.

But sales of essential drugs like Dolutegravir for HIV and Nucala for asthma aren’t something that declines in line with wider movements in the global economy. Rather, a backcloth of rising populations and increased healthcare investment across the world is likely to keep fuelling medicines demand in the near term and beyond.

And with GlaxoSmithKline having chucked vast sums at its R&D operations to offset crushing patent losses, the City expects the company to get earnings moving again from 2016 onwards. Indeed, a 12% earnings rise is predicted for 2016, resulting in a P/E rating of 15.8 times. And a pledged yield of 80p per share gives an impressive 5.9%.

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 recommended GlaxoSmithKline. 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

Investing Articles

5 steps to start buying shares with under £500

Learn how this writer would start buying shares with a few hundred pounds in a handful of steps, if he…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

The FTSE 100 offers some great bargains. Is this one?

Our writer digs into one FTSE 100 share that has had a rough 2024 to date, ahead of its interim…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£9,000 of savings? Here’s my 3-step approach to aim for £1,794 in passive income

Christopher Ruane walks through the practical steps he would take to try and turn £9,000 into a sizeable passive income…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’d buy 29,412 shares of this UK dividend stock for £150 a month in passive income

Insiders have been buying this dividend stock, which offers an 8.5% yield. Roland Head explains why he’d choose the shares…

Read more »

Red briefcase with the words Budget HM Treasury embossed in gold
Investing Articles

Could the new UK budget spell growth for these 6 FTSE stocks? I think so!

Mark David Hartley considers six UK stocks that could enjoy growth off the back of new measures announced in the…

Read more »

Investing Articles

With a 6.6% yield, is now the right time to add this income stock to my ISA?

Our writer’s looking to boost his Stocks and Shares ISA. With this in mind, he’s debating whether to buy a…

Read more »

Dividend Shares

This blue-chip FTSE stock just fell 12.5% in a day. Is it time to consider buying?

Smith & Nephew is a well-known, blue-chip FTSE stock with a decent dividend yield. And its share price just dropped…

Read more »

Investing Articles

At 72p, the Vodafone share price looks to be at least 33% undervalued to me

Our writer looks at a number of valuation measures to determine whether the Vodafone share price reflects the fair value…

Read more »