With markets struggling to find direction in recent weeks, I’m more committed than ever to reading up on the latest news and updates from UK companies for clues as to what the rest of 2022 might hold. Three of the biggest all report in July.
Housebuilder Persimmon (LSE: PSN) is down to issue a trading update on 7 July. Having tumbled a third in value in 2022 alone, investors will naturally be looking for some reassuring comments from CEO Dean Finch.
I’m inclined to think that while trading will be just fine, the growing likelihood of a recession hitting the UK could play on investors’ minds. After all, this could mean a hitherto buoyant housing market will start to slow. As such, there’s certainly no guarantee Persimmon shares won’t slip lower in the months ahead.
Nevertheless, there’s still a lot to like here. Having been hammered in the market sell-off, the stock now changes hands for just seven times earnings. There’s also that monster, inflation-beating 12.5% forecast dividend yield.
Although I’ve been critical of the firm in the past (mostly to do with its overly generous remuneration policy for a departing CEO), I’d feel comfortable buying a slice today.
Another FTSE 100 stock reporting next month is credit firm Experian (LSE: EXPN). Like Persimmon, the company has seen its value decline by roughly a third in 2022, so far.
This seems overly harsh. Experian is a quality firm possessing solid growth credentials, a competitive position and delivering high margins. Encouragingly, veteran stock-picker Nick Train remains a big shareholder.
What are the downsides to the investment case? Well, the valuation — a forward price-to-earnings (P/E) ratio of 21 at the time of writing — doesn’t exactly scream ‘bargain’. This is especially if interest rates continue to rise and lending demand falls. This could have an adverse effect on Experian’s earnings, at least temporarily. We might find out whether this is already the case when a Q1 trading update arrives on 14 July.
For someone investing for the long term however, I’d already be willing to buy.
The third of the FTSE 100 stocks I’ll be following next month is consumer goods giant Unilever (LSE: ULVR). Interim results are due on 26 July.
I think it’s fair to say sentiment around this company has been fairly low for a while now. In addition to concerns over growth, the company has also faced criticism for focusing on the wrong things. Most notably, star UK fund manager Terry Smith suggested Unilever was getting a little too obsessed with boosting its ESG credentials. As he memorably put it, “a company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot.”
Despite this, Smith remains a fan. As do I. A bursting portfolio of brands that most people wouldn’t consider switching from should help it through these tricky times. A mere 6% fall in the share price in 2022 goes some way to highlighting its defensive quality.
A P/E of less than 16 is far lower than the five-year average of 20 too. I’d have no hesitation buying now.