Will Centrica plc, BAE Systems plc And Indivior plc Bounce Back?

Can Centrica plc (LON: CNA), BAE Systems plc (LON: BA) and Indivior plc (LON: INDV) bounce back when they release their results on Thursday? Dave Sullivan assesses their chances.

| 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.

And it was all going so well when I left my trading desk yesterday morning, with investors reacting positively to the news of the meeting between Saudi and Russian officials. This initially caused oil prices to rise as much as 6% on hopes that production would be cut in order to reduce the current oversupply in the market. However, the formal announcement was welcomed with less optimism as investors took the view that the deal may not remove a significant number of barrels from the market. This sent Brent crude into negative territory, and off by around 4% to just over $32 a barrel, a 10% intraday swing.

Getting company-specific

I think it’s fairly safe to say there will be some traders out there nursing a rather painful loss on the news. This is why I prefer to invest for the long-term and wait to see what management has to say about how the company is trading, not buy or sell on a single event or piece of news.

The good news, to my mind at least is the fact that there are results and trading updates aplenty at this time of the year, and I’ve selected three I think are currently looking interesting.

As we can see from the chart below, Centrica (LSE: CNA) has underperformed the market of late, cutting its dividend along the way. BAE Systems (LSE: BA) has broadly tracked the market over the last 12 months, buying back shares along the way. And Indivior (LSE: INDV) has fallen from grace mainly around concerns about delays to product development. To a lesser extent there’s also general negativity in the sector following comments from US presidential hopeful Hillary Clinton. She’s promised to hold drug companies accountable so they get ahead by investing in research, not jacking up costs.

Great expectations?

Interestingly, earnings expectations for both Centrica and BAE Systems have been reducing throughout the course of the year. Once market volatility has been factored-in to the mix, investors may well be positively surprised when both companies release results tomorrow – indeed even results that are only slightly better than expected can do wonders for the share price.

In a bizarre twist, earnings expectations over at Indivior have been increasing over the last 12 months as management continues to guide the market higher as generic competition in the space is not as damaging as feared. Yet the share price has fallen from highs of around 250p to 143p as I type.

Dividend appeal

As we’ve seen with Indivior and Centrica, recent market volatility and company-specific news have seen the share price sink and the prospective dividend yield rise, to 5% and 6%, respectively. And though BAE systems has tracked the blue-chip index, the shares still yield over 4%.

You should never buy a share purely for the yield, but I do think that this basket of shares is worthy of further research for those of you prepared to invest over the longer term.

Will You Grow Richer In 2016?

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.

Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has recommended Centrica. 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

Growth Shares

2 UK stocks knocking on the door of promotion to the FTSE 100

Jon Smith points out a couple of UK stocks that he feels could be ready for the big league based…

Read more »

Investing Articles

Rolls-Royce shares just fell 7%. Is it time to buy?

This investor in Rolls-Royce shares takes a look at the FTSE 100 engine maker's trading update to see what caused…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

What’s going on with the Auto Trader share price?

Paul Summers takes a closer look at why the Auto Trader share price has tumbled despite the company posting higher…

Read more »

Investing Articles

Legal & General shares look set to give me a mind-blowing 10.22% yield in 2026!

Harvey Jones is getting a brilliant second income from his Legal & General shares and expects even more to come.…

Read more »

Investing Articles

I’d consider this beaten-down FTSE 100 dividend stock to target a second income of £19,000

Our writer sees an opportunity to earn a substantial second income by investing in this UK insurance giant. Here’s his…

Read more »

Investing Articles

How cheap is the 72p Vodafone share price?

The Vodafone share price looks very cheap having fallen to a 72p price tag. But is it really the bargain…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Up 43% in a year and the IAG share price could keep on rising!

One of the FTSE 100’s highest-flying stocks still looks cheap on an earnings basis. Is this a brilliant buy for…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

As the BT share price slumps on H1 results, should I buy for big dividends?

Just when I thought the BT Group share price could be set for a new bullish run, the telecoms giant…

Read more »