2020 was a disaster for the media industry as the Covid-19 crisis and economic meltdown decimated advertising budgets. Concerns are rising that conditions could get tougher again as the pandemic rages on and inflationary pressures rise. This is why FTSE 100 stock ITV’s (LSE: ITV) share price has been falling again in recent months.
Could it be argued however, that the market is being a bit too pessimistic? After all, industry insiders expect advertising budgets to remain strong as we move into 2022. Take WARC, for example. The media intelligence firm thinks ad spend will hit record levels of £7.9bn in the fourth quarter. That’s up almost £1bn from the corresponding period in late 2020.
ITV for one has continued to see a steady pick-up in advertising revenues. Its latest update in late July showed total ad sales up 27% year-on-year in the first half, with revenues up 87% and 115% in May and June respectively.
I’m expecting the business to confirm that conditions have remained strong when third-quarter numbers are released on 10 November. This could give its share price a fresh injection of jet fuel.
Today, ITV trades on a forward price-to-earnings (P/E) multiple of just 8 times for 2021. At current prices it sports big dividend yields of 3.5% and 5.4% for this year and next respectively too. It’s not inconceivable that the company’s revenues could sink again if the economy slumps. But I still think these numbers make it a highly attractive share to buy right now.
6.8% dividend yields!
Housebuilder The Berkeley Group (LSE: BKG) is scheduled to release half-year financials on 7 December. I’d buy this FTSE 100 share too, on expectation of another sparkling set of numbers.
Britain’s builders face increasing pressure on their profit margins as raw materials prices balloon. However, revenues are rising so strongly at the likes of Berkeley that I think they still merit close attention. This particular operator said in September that “resilient” market conditions had continued since its prior release three months earlier.
Rocketing property prices are lighting a fire under housebuilder profits. The Office for Budget Responsibility thinks that home values will continue rising for years. In upgraded forecasts just released, the public body thinks prices will rise every year through to 2026.
Over the next five years it reckons average home values will have grown 13%. This doesn’t surprise me, given that historically-low borrowing rates and the government’s Help to Buy support scheme are set to continue.
At current prices, Berkeley trades on a forward P/E ratio of 12 times. I consider this figure to be quite undemanding, considering the company’s bright long-term earnings picture. However, it’s the builder’s big dividend yield that makes it such a terrific buy, in my book. This sits at an enormous 6.8% for the current financial year. I’d buy Berkeley today and aim to hold it for years to come.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.