A bright trading update from one of its FTSE 100 peers in the packaging industry has reinforced my belief that DS Smith (LSE: SMDS) will release a sunny statement of its own when half-year results come out on December 5.
Back in late October, Smurfit Kappa advised that organic volumes were up 2% during the first nine months of 2019 in both Europe and the Americas. Not a rip-roaring result, but solid enough given the challenges in the packaging market of late. What was very promising, however, was that the business advised that it had seen business tick up in October too.
Reasons to be cheerful
On the very same day, DS Smith said that it remained in good shape to meet its new return on sales target, which was hiked to 12% from 10% the previous month. In its own update, the Footsie firm commented that it had continued to see “strong pricing discipline and cost improvements together with modest box volume growth.”
On top of this, the box-maker said that fresh business wins in its European and North American marketplaces, allied with its focus on the rapidly-growing e-commerce and fast moving consumer goods (FMCG) sectors, made it confident of “progressive volume growth” in the second half of the year. Clearly, signs of fresh ground being made on this front would give its share price an extra dose of rocket fuel.
Bouts of fizzy investor interest has sent DS Smith’s share price to one-year peaks in recent sessions, though a forward P/E ratio of 10.6 times suggests that the stock still provides great value (and certainly when compared with the broader FTSE 100 corresponding average of 14.5 times). Throw a jumbo 4.6% dividend yield for the fiscal year to April 2020 into the equation and I reckon this is a brilliant share for value-chasing income seekers to plough into today.
Even bigger dividend yields!
I’m also expecting some encouraging trading details when Tritax EuroBox (LSE: EBOX) updates the market on December 10 with third-quarter results.
Like its British cousin, Tritax Big Box, this small-cap specialises in providing so-called big box logistics spaces, but on the European mainland instead. And what makes this share such a standout pick for long-term investors is the brilliant revenues opportunities created by the explosion in e-commerce.
Since the start of 2019 it’s acquired three new German logistics locations in Bremen and Hammersbach, as well as a site in Lodz, Poland to take the number of sites in its portfolio to 11. And Tritax EuroBox has plenty more scope to keep the acquisitions coming after it boosted its existing unsecured revolving credit facility of €300m in late September by an extra €125m.
At current prices, the property powerhouse carries a dirt-cheap PEG multiple of 0.9, an absolute snip when you consider its aggressive expansion strategy in a rapidly-growing market. With Tritax EuroBox carrying a huge 5.2% dividend yield as well, I reckon it’s too good to pass up.
Royston Wild owns shares of DS Smith. The Motley Fool UK has recommended DS Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.