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Why I’d Buy Rolls-Royce Holding PLC, Wincanton plc And British Land Company PLC

Today I am looking at three headline makers in Monday business.

Rolls-Royce Holding

Embattled engineer Rolls-Royce (LSE: RR) has been giving shareholders an almighty headache for well over a year now. The London firm has churned out profit warning after profit warning during the period thanks to accelerating spending cuts across the oil sector, while ongoing investigations concerning fraud in China, Brazil and Indonesia are adding extra pressure to the share price — ‘Double R’ has shed 26% since mid-April as a result.

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Still, for those playing the long game I believe Rolls-Royce is an exceptional stock selection, as steadily-soaring demand for new aircraft lights up engine and service revenues at the business. The company’s position at the aerospace sector’s top table was underlined by today’s announcement that it had inked deals with the International AirFinance Corporation and Saudi Arabian Airlines, to provide maintenance and Trent engines respectively, for 20 Airbus A330 planes. The deals are worth a combined $2.23bn.

The current turbulence affecting the firm is not expected to abate any time soon, and the City expects Rolls-Royce to see earnings slump 17% this year and 18% in 2016. Still, this year’s figure leaves the business dealing on a P/E rating of just 14.4 times — in my opinion this is a great price considering the company’s long term potential. And I believe predicted dividends of 22.7p per share for 2015 and 22.9p for next year, yielding a very handy 2.9%, sweeten the investment case.


Shares in logistics specialists Wincanton (LSE: WIN) have taken off in recent months, hitting their highest for almost five years in the process around 190p. But despite this rapid ascent — the stock has jumped 25% during the past three months alone — I reckon the Chippenham business still offers plenty of value.

Brokers expect Wincanton to endure a 1% earnings decline for the year concluding March 2016, but this still leaves the company dealing on an ultra-low P/E multiple of just 9 times. And expectations of a 9% earnings rise in 2017 drives the ratio to an even-better 8.1 times. Moreover, when you throw in expectations of a huge dividend hike from an anticipated 4.2p per share this year to 7.5p in 2017, pushing the yield from 2.3% to 4.1%, the transporter suddenly looks like a steal.

Wincanton advised today that it had signed an accord with BAE Systems to provide a string of new services, cementing its position as a key partner to the defence giant. With the logistics provider recently advising that trading remains in line with expectations, and enjoying a steady stream of contract wins and extensions elsewhere — the firm also inked a new five-year deal with Heinz recently — I reckon the firm provides plenty of upside potential.

British Land Company

Like Wincanton, British Land (LSE: BLND) also released a positive update in start-of-week trade and was consequently dealing 0.5% higher on the day. The company advised that it had enjoyed “a good start to the year,” with 129,000 square feet of retail lettings and renewals and 132,000 square feet of office lettings and renewals having been agreed during April-June. As well, British Land advised that more than nine-tenths of its ‘Cheesegrater’ property was now occupied.

With the domestic economy firmly on the mend I fully expect British Land’s properties to continue filling up, a view that is shared by the number crunchers. The capital-based business is anticipated to record earnings growth of 6% in the years ending March 2016 and 2017 respectively.

A P/E multiple of 26.1 times for this year and 24.7 times for 2017 hardly strikes one as eye-popping value for money, but I believe British Land’s ability to outperform the wider market merits this premium. And when you factor in decent predicted dividends of 28.6p per share for 2016 and 29.7p for 2017, figures that produce chunky yields of 3.4% and 3.5%, I reckon British Land is a decent pick for those seeking solid returns.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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