Why Ocado, Wm. Morrison Supermarkets, and Premier Farnell Should Beat the FTSE 100 Today

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LONDON -- In a development that surprised no one, the FTSE 100 (FTSEINDICES: ^FTSE  ) has once again set a new five-and-a-half-year high today. The blue-chip index is up 0.45% to 6,718 points as of 9:20 a.m. EDT. The FTSE's upward run paused only briefly after the U.S. Federal Reserve said it could start relaxing its economic-stimulus policies by the summer.

We still have plenty of companies doing even better, mind. Here are three from the FTSE indexes whose share prices are rising and look set to beat the market today.

The big rise this morning comes from Ocado, whose share price has soared by 29% on the long-expected news that it is to license "certain technology, logistics and distribution services" to Wm Morrison Supermarkets so the latter can launch its own online grocery business. The deal will also see the sale to Morrisons of half of the existing capacity at Ocado's new Dordon fulfillment facility.

The partnership should have a number of benefits for Ocado, including cost-sharing and an ability to invest the fees it earns in further developing its intellectual property. The agreement also adds a confidence boost for the firm's technology and operations, which should reduce one of the uncertainties facing shareholders. Ocado told us its current agreement with Waitrose would be unaffected.

The deal also gave a boost to Morrisons, though its share price picked up a less enthusiastic 1.2%. Morrisons will pay Ocado an initial £170 million for its share of the facilities at Dordon and will invest an extra £46 million to expand the site. Using Ocado's experience and facilities will allow Morrisons to enter the online food market far sooner that it could have done otherwise, with the commencement of deliveries planned for January 2014 using a fleet in Morrisons livery.

Morrisons also expects to see further development costs of £25 million this year and said the new venture should become profitable by fiscal year 2018. Chief executive Dalton Phillips said, "From a standing start, Morrisons will be competing in the fast growing on-line channel by the end of this year with a really compelling proposition."

Premier Farnell (LSE: PFL  )
Shares in Premier Farnell, a supplier of electronic products and repair services, has picked up 0.6% following the release of a first-quarter update. The statement revealed that sales per day achieved year-on-year growth of 2.8%, and the one division in which sales were falling improved to a sales drop of just 0.7%.

The firm said it should perform in line with market expectations, suggesting a rise in earnings per share of about 4.5% for the full year and putting the shares on a P/E of 14. There's a dividend yield of about 4.6% forecast, too.

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5/27/2016 11:35 AM
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