Today I am looking at three London stocks making the headlines in Thursday business.
Cake colossus Premier Foods (LSE: PFD) has failed to ignite the market after releasing a muddy trading update, and the company was last dealing flat from Wednesday’s close. The food producer — which produces marquee labels from Mr Kipling cakes through to Bisto gravy and Ambrosia desserts — advised that total sales fell 1.6% during April-June, to £166.2m, owing to an earlier-than-usual Easter period.
However, Premier Foods is splashing the cash through product innovation and fresh marketing initiatives to get sales moving higher again, such as gel pot technology for its Oxo label. The City is convinced that these plans should pay off handsomely in the coming years, and expects Premier Foods to put to bed recent heavy earning weakness and notch up earnings growth of 21% and 3% for the years concluding March 2016 and 2017 correspondingly.
As a result the business changes hands on bargain-basement earnings multiples of 5.1 times for 2016 and 4.9 times for 2017, comfortably below the threshold of 10 times that indicates unmissable value. So although ongoing work to bolster the balance sheet makes the prospect of a dividend as elusive as ever, I reckon Premier Foods’ exceptional cheapness on a pure growth basis more than makes up for this.
Aberdeen Asset Management
Financial services play Aberdeen Asset Management (LSE: ADN) has taken a battering in Thursday business and was last dealing 8.2% lower, making it the worst FTSE 100 performer so far today. The Aberdeen-headquartered firm announced that assets under management had slumped to £307.3bn as of the end of March, down from £330.6bn at the same point in 2014 as a combination of tough market conditions and adverse currency movements have weighed.
Aberdeen Asset Management continues to suffer from subdued investor appetite for Asia, resulting in a £9.9bn net outflow during January-March. Despite these travails, however, the City expects the business to punch earnings growth of 3% and 6% for the full years concluding September 2015 and 2016 correspondingly. These figures leave the asset managers dealing on ultra-attractive P/E readings of 12.6 times and 11.9 times for these years.
On top of this, Aberdeen Asset Management is also expected to keep its progressive dividend policy on track during the medium term at least, with prospective payouts of 19.8p per share for this year and 21.6p for 2016 creating vast yields of 4.8% and 5.3%. Of course market jitters concerning potential Federal Reserve rate hikes could cause further near-term turbulence for the Scottish business. But I believe that for more patient investors the fund manager’s emerging-market bias could provide plentiful returns.
Unlike the two stocks I have mentioned, car retailer Vertu Motors (LSE: VTU) pumped in a positive trading statement on Thursday and was last 1.9% up on the day. The firm advised that it had enjoyed “continued growth in like-for-like revenues and gross profits” during March-June, with new motor sales and servicing sales continuing to stomp higher.
With employment and wage levels steadily rising this performance comes as no surprise, and I expect motor sales to maintain the strong trajectory seen in recent times. With Vertu Motors also steadily slashing overheads, the number crunchers expect the company to post earnings growth of 5% in the period concluding February 2016, and a further 11% advance is chalked in for 2017.
Consequently Vertu Motors deals on P/E multiples of just 11.7 times for this year and 10.7 times for next year, figures that I consider brilliant value given the firm’s exceptional revenues outlook. In addition, predicted dividends of 1.1p per share for 2016 and 1.3p for the following period create handy-if-unspectacular yields of 1.7% and 2%.
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