2016 Top Stocks: Lloyds Banking Group plc, Persimmon plc And Jupiter Fund Management plc Quarterly Review

Dave Sullivan checks his top stocks for 2016: Lloyds Banking Group plc (LON: LLOY), Persimmon plc (LON: PSN) and Jupiter Fund Management plc (LON: JUP). Are they still worth consideration?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Regular readers may remember my article from December where I highlighted three well established companies that I expected to do well over 2016 and beyond – Three Top Picks For 2016.

While I tend to review my positions when results and trading statements are released to the market, I also like to review my performance and the stocks that have driven that performance at the end of each quarterly period, as sometimes the market can throw up opportunities, especially during periods of volatility, and there has been no shortage of that recently.

The chart doesn’t lie

As we can see from the chart, things haven’t quite gone to plan for these three shares over the last quarter, but has anything fundamentally changed with the companies themselves, or does the market simply have other things on its mind?

A bank on the mend

February was a month of two halves for Lloyds Banking Group (LSE: LLOY) with the shares falling to three-year lows in the first two weeks of the month and then bouncing strongly along with the market, then stronger still when the final results were released on 25 February. The market seemed particularly pleased with the special dividend and generally more positive comments about how management expects the bank to perform against previous guidance.

Despite the recovery in the share price the shares still trade on a 12-month forecast rolling PER of less than 9 times earnings and are expected to yield over 6% according to data from Stockopedia.

Firing on all cylinders

Another pick in the doldrums during a volatile month was housebuilder Persimmon (LSE: PSN) as the shares fell with the market. However, as we have seen with Lloyd’s, the shares rallied strongly following a better-than-expected set of results and a significantly enhanced capital return plan. That’s something that we’ve also seen at sector peer Berkeley Group Holdings.

Following the results Mr Market, or more precisely analysts, have been upgrading EPS estimates leaving the shares trading on a forecast PER of less than 12 times earnings. And as the capital return plan has also been enhanced to return £5.50 between 2017 and 2021 inclusive, the shares still yield over 5%.

Exposed to the volatility of the market

The underperformer of the group by a fair margin is investment manager Jupiter (LSE: JUP). Its shares have underperformed despite strong results that saw it increase assets under management (AUM) to just shy of £36bn and inflows of £1.9bn with margins remaining at 51% of EBITDA and an underlying increase in the full year dividend to 25.5p.

All that said, the market looks forward and it has to be said that Jupiter is a geared play on the health of the markets. Even if the company manages to outperform I could still see the shares underperforming in a difficult or worried market.

However, should the market rally then the opposite would be true and shareholders could well see a sector-beating performance over the rest of the year with a yield just shy of 6% while they wait.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Dave Sullivan 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.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »