As traders return from their holidays, I reckon September will be a very interesting month for the UK stock market. This could be especially true for those FTSE 100-listed companies scheduled to release updates on trading.
Here are three I’ll be watching like a hawk.
Associated British Foods
Primark owner Associated British Foods (LSE: ABF) is down to release an end-of-financial-year statement on 10 September. Investors will surely be hoping for a bit of good news. While not a disaster when compared to some of its battered peers, the stock has slightly underperformed the index year-to-date.
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Some analysts remain bearish. Deutsche Bank recently cut its target share price to 2,190p on the belief that profitability in the company’s sugar unit will drop and that margins at its other businesses will struggle. That’s a not-insignificant drop from where it currently stands.
Then again, one could argue that the valuation isn’t demanding. I can currently pick up the shares for a pretty-reasonable 12 times FY25 earnings. A 2.9% forecast dividend yield is slightly lower than the average across the FTSE 100 but it’s set to be easily covered by profit.
There’s also a lot to be said for the diversified nature of the company. This could give investors some insurance against most economic headwinds in the months ahead.
Next
Another top-tier giant reporting next month is Next (LSE: NXT).
In sharp contrast to Associated British Foods, the clothing and homewares retailer is having very good 2024. As I type, the shares have climbed 26% since the beginning of January, easily thrashing the return of the FTSE 100 (9%). Go back a full 12 months and the former’s gain is approaching 50%.
I reckon that’s a pretty remarkable result considering that most retailers have been hit hard by the cost-of-living crisis.
Based on its last trading statement, I wonder if interim results on 19 September could push the price even higher. At the beginning of August, the firm raised its full-year profit outlook after better-than-expected Q2 sales.
Having done so well, the stock now trades on a forecast price-to-earnings (P/E) ratio of 16. That’s on the expensive side within the consumer cyclicals sector.
One concern I do have is that a longer-than-expected pause until the next interest rate cut could stifle any recovery in consumer sentiment and lead to some drift in the share price.
Halma
A final FTSE 100 stock I’ll be checking in on is health and safety equipment maker Halma (LSE: HLMA). It’s down to release a trading statement on 26 September.
Like Next, this high-quality company has easily outperformed the return of the FTSE 100. But again, the valuation is the sticking point. Having recovered some of its mojo after beating analyst estimates in June, Halma shares now trade at 29 times earnings.
Based on the firm’s history of growing revenue and profit, not to mention its multi-decade history of increasing dividends by 5% or more every year, that premium isn’t unjustified. Confirmation of a reduction in US interest rates next month could also provide a further boost to growth stocks like this.
Having said this, one danger is that Halma’s strategy of growing via acquisitions might not always pay off and earnings growth stalls. That could knock investor confidence.
