As well as having a reputation for being a rather volatile month for markets in general, October also sees a raft of updates from many FTSE 100 stocks. Here are just three that should receive considerable attention from investors (including myself) over the next few weeks.
Cheap commodities play
Top-tier mining giant Rio Tinto (LSE: RIO) is scheduled to release an update on operations slap bang in the middle of October. Based on its last statement, I don’t think there’s too much for existing holders to worry about. Back in July, the company announced it had achieved record financial results over the first half of 2021.
Unfortunately, one clear issue with RIO (and the other FTSE 100 miners) is that it has very little control over the price of what it digs up. It’s also susceptible to wider economic concerns. News of a slowdown of growth in China, for example, has contributed to an 11% reduction in the share price over the last month.
Despite this loss of momentum, I must say I’m very tempted to add some RIO to my own portfolio. A P/E of just five looks great value given its rock-solid finances and monster dividend yield. The potential for a commodities supercycle, due to demand for renewable energy sources, is another big attraction.
Trouble at the top
Pharma giant GlaxoSmithKline (LSE: GSK) is another stock that will be put under the market’s microscope next month. It’s down to provide an update on Q3 trading on 27 October. Those already invested will surely be hoping there’s something to take the focus off the ongoing tension between CEO Emma Walmsey and activist investors.
The latest of the latter to get involved is London-based hedge fund Bluebell Capital Partners. It’s pushing for someone with more scientific experience to take the helm after the company spins off its consumer health arm in 2022.
With the share price up only 1% or so year-to-date, you can see why frustration’s growing. And, ironically, the longer GSK trades sideways, the longer investors will refrain from prioritising its stock over others.
Notwithstanding this, I still think the valuation — at 14 times earnings — is appealing. In fact, GSK’s defensive properties could make it a great option if markets lurch south in the near future. Despite confirmation of a dividend cut, shares should also yield 4.2% next year (based on the current share price).
FTSE 100 oil giant
Oil major Royal Dutch Shell (LSE: RDSB) is a third stock I’ll be watching closely, especially after all the fuel-shortage shenanigans we’ve seen recently. Third-quarter numbers are expected a day after those of GSK.
As I type, RDSB shares trade on nine times forecast earnings. That’s not a bargain relative to the industry. FTSE 100 peer BP, for example, trades on a lower multiple. Nevertheless, Shell does look inexpensive compared to the general market. The 3.8% dividend yield is also higher than that of the FTSE 100 (3.5%).
There are risks, of course. The oil price can be notoriously volatile, even though analysts are bullish on demand for the rest of 2021. The switch in focus to producing greener sources of energy won’t come overnight either. Nor will it be cheap to accomplish.
As things stand, I’m content to sit on the sidelines. Considering its ability to move the FTSE 100 however, I’ll be taking a keen interest in next month’s news.
