Beginners' Portfolio: Watchlist Update

This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.

LONDON -- Over the past couple of months, I've pretty much neglected our Beginner's Portfolio watchlist. I have been keeping an eye on the shares in it, but there's really been little to move -- other than to actually buy shares in BAE Systems, which really wasn't on the list for very long before I realized I couldn't resist.

So, here's an update on what our watchlist shares look like now, as we reach the Christmas holidays -- and you should spot a couple of new additions.

Company Market Cap
(Pounds)
Price
(Pence)
Forward P/E Forward Dividend
WS Atkins (LSE: ATK  ) 769 million 762 9.8 4.2%
Ricardo 195 million 375 11.7 3.6%
TUI Travel (LSE: TT  ) 3.2 billion 286 10.7 4.4%
Unilever (LSE: ULVR  ) 31.1 billion 2,409 18.7 3.2%
United Utilities 4.6 billion 681 16.5 4.9%
Trinity Mirror (LSE: TNI  ) 248 million 94 3.3 0.2%
Daisy Group (LSE: DAY  ) 256 million 94 6.8 1.7%

The first thing to note is that WS Atkins has put on 8.5% in the past three months, taking the share price to 762 pence. The price did actually plunge on the approach to the firm's interim results on Nov. 15, dropping as low as 638 pence. But the results were just as the firm's earlier update had suggested, everything was in line with expectations, and the price powered back up again. But the shares are still on a forward price-to-earnings ratio of just 9.8, and missing the recent rise doesn't mean we should ignore further potential undervaluation.

TUI Travel has continued its surge, gaining a massive 24% to 286 pence since I featured it in September. Before the travel firm's full-year results, I noted "a forecast dividend of 5.1% from a share on a P/E of 10, and no debt," so maybe I should have acted on that -- the results were very strong, as expected. But we'll always miss short-term opportunities, and looking ahead to forecasts for the year to September 2013, the shares certainly don't look overvalued.

Two newcomers
On to the two new entrants in the table, Trinity Mirror and Daisy Group.

I've been watching both for quite some time myself, and at its lowest point, Trinity Mirror shares looked to be ludicrously undervalued. A lot of that was emotional, especially during the days under the leadership of the unpopular Sly Bailey. In addition, many people think that printed newspapers are as dead as the trees they're made from. But people have been saying that about printed reading material for years, and Trinity Mirror is still expected to carry on making decent profits. Current forecasts put the shares on a P/E of just 3.3, even after the share price has more then trebled since August, which still seems silly. This could be one for further investigation in the New Year.

Having a telecommunications background, I've always had a soft spot for small telecoms companies -- even though I expect many to be failures in the long term. But every now and then, one comes along that looks promising, and I think Daisy could be one. One thing I hadn't realized until I recently read a September article by fellow writer G A Chester is that Neil Woodford's investment funds are heavily invested in Daisy. So this is another one for a January analysis.

What next?
Next week is a holiday week, so I've prepared a quick look at my idea of how beginners should approach the whole vexed question of how to value shares, which you can read at your leisure.

And next week there will also be a new look at the valuation of our portfolio. I don't want to give too much away, but it's looking like a satisfactory end to the year.

Finally, a big part of the Beginner's Portfolio is based on a strategy of buying strong dividend-paying shares, and Neil Woodford is an acknowledged expert on it. The free Motley Fool report "8 Shares Held by Britain's Super Investor" takes a look at some of his major holdings, and I strongly recommend learning from successful investors as part of the beginners' process. Click here to get your free copy, while it's still available.

The free report "10 Steps to Making a Million in the Market" is also one I'd urge beginners to have a read of, because it's inspirational and it really does make a convincing case for the great potential of long-term investing in quality companies.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2167018, ~/Articles/ArticleHandler.aspx, 8/29/2014 8:01:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement