Sometimes it pays to keep an eye on stock market trading data, as an increase in trading volume can highlight stocks that are about to move higher — or lower — and highlight interesting trends.
Today is a good example: earlier this morning, the three most-traded FTSE 100 stocks were Standard Chartered (LSE: STAN), TUI Travel (LSE: TT) and BHP Billiton (LSE: BLT).
These companies don’t usually make it to the top of the most-traded list, so let’s take a closer look at what might be happening.
Standard Chartered
I’ve been hoping for an opportunity to buy Standard Chartered’s shares at less than 1,000p, and yesterday’s profit warning sent the bank’s share price plummeting straight down to my buy price.
Despite this, I haven’t hit the buy button yet.
Although Standard Chartered is trading just below its tangible book value of 1,060p and appears cheap, I’m concerned that if poor income performance and rising impairments continue, bad debt provisions could erode the bank’s book value, and profits could fall for longer and further than the market currently expects.
I’m going to stay on the sidelines for a little longer, but today’s heavy trading and flat price suggests that opinion is evenly divided in the wider market.
TUI Travel
Yesterday’s news that shareholders in TUI Travel PLC and its German parent TUI AG have voted in favour of the firms’ merger came after market closed, but investors have reacted this morning, sending TUI’s share price up by more than 2% to around 390p.
The new company will have a market capitalisation of around €7bn and could deliver cost savings of as much as €170m, according to TUI Travel’s chief executive, Peter Long. The firm will remain in the FTSE 100, and today’s strong buying suggests that investors are confident the merger will be a success.
BHP Billiton
Oil and mining behemoth BHP rarely grabs headlines, but I feel that there might be hidden value in the firm’s shares, at present.
BHP’s share price is at its lowest level since 2009, but sales, profits and dividends have all risen substantially since then — the dividend has risen by an average of 8% per year.
BHP is focusing on cutting costs in all of its core businesses, and unit costs in iron ore, copper, coal and petroleum should all fall significantly. This will help offset weaker commodity prices and should boost profits substantially if commodity prices start to rise again.
