On-track to meet expectations
Today’s update from shopping centre operator Intu Properties (LSE: INTU) is upbeat and shows that the company is on-track to meet full-year expectations. Although the EU referendum has caused uncertainty among investors and in global stock markets, Intu has seen little change in its operating performance in recent months. As such, it is on target to deliver growth in like-for-like net rental income of between 2% and 3% for the full-year.
Clearly, Intu’s share price fall of 12% in the last year has been hugely disappointing. But with regional shopping centres remaining a very attractive asset to global investors, Intu’s share price could rise due to increased demand for its yield and low valuation. In fact, Intu now has a yield of 4.6% and trades on a price to book (P/B) ratio of just 0.8; both of which indicate that now is a great time to buy for the long term.
Of course, UK consumer confidence could come under a degree of pressure over the medium term, as interest rate rises seem likely at some point. However, with Intu having a sound business model and a wide margin of safety, it seems to be well-placed to deliver rising profitability in future.
Going from strength to strength
Also reporting today was Direct Line (LSE: DLG), with the insurer announcing that gross written premiums rose by 4.2% in the first quarter of the year. This is in-line with market expectations and shows that the motor insurance specialist is going from strength to strength. Furthermore, trading benefitted from investment in brand differentiation and proposition initiatives, with Direct Line also witnessing a relatively high retention rate in both its motor and home divisions.
Looking ahead, Direct Line continues to expect to report a combined operating ratio of between 93% and 95% for the full-year. With its bottom line forecast to rise by 7% this year and by a further 5% next year, Direct Line could experience an upward re-rating over the medium term. That’s especially the case since it trades on a price to earnings (P/E) ratio of just 12.9 which when combined with a yield of 5.7%, indicates that Direct Line is a strong long term buy.
A sound move
Meanwhile, shares in Nighthawk Energy (LSE: HAWK) have soared by over 10% today after it amended the project for which it is currently seeking approval in Colorado. Back in March, Nighthawk received conditional approval for the project, with it requiring 80% approval of the non-cost bearing royalty interest owners. While Nighthawk is currently attempting to do just that, in an effort to expedite the process it has decided to reduce the size of the water flood area.
The effect of doing so would be to halve the cost of the project, but to recover around 70% of the original incremental reserves. As such, it seems to be a sound move and has been well-received by the market. While the wider oil and gas industry is relatively high risk, Nighthawk could be worth a closer look for less risk averse investors owing to its impressive asset base and long term profit potential.
