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LONDON -- November will see results and updates from a number of companies I'm interested in. I already own shares in three of them, but I would consider buying more at the right price. The other two, I don't currently hold, but they're on my watch list.
I'll be reading the announcements from all five companies very closely, and weighing up whether the time is ripe for me to put some cash into any of these shares.
Food for thought
Blue-chip conglomerate Associated British Foods (LSE: ABF.L ) is a company that's been on my watch list for some time. The owner of clothing chain Primark and manufacturer of a range of branded and private-label grocery products also has sugar, ingredients, and animal feedstuffs businesses.
I like ABF's diversity. The trouble is, so does the market -- and the shares tend to trade on a relatively high valuation compared with the average for the FTSE 100 (UKX). The following table shows ABF's price-to-earnings ratio and dividend yield on various occasions when I've taken a look at the company over the past couple of years.
Share Price (Pence)
Forward Dividend Yield
|Jan. 20, 2011||1,080||14||2.4%|
|Dec. 29, 2011||1,105||13||2.5%|
|April 24, 2012||1,240||14.5||2.2%|
|Oct. 26, 2012||1,389||15||2.1%|
The table doesn't quite tell the full story: I missed a chance to buy ABF when the market crashed in August 2011. The shares dipped under 10 pounds and the P/E dropped to less than 12, but I was greedy for a lower price still, and there were many competing opportunities around at the time.
In a pre-close trading update in September, ABF confirmed that adjusted operating profit and earnings per share for the full year "will be substantially ahead of last year." Analysts are expecting a 16% rise in EPS when the company's final results are announced on Nov. 6. I suspect ABF may have to remain on my watch list for the time being.
High-beta blue chip
Blue-chip asset manager Schroders (LSE: SDR.L ) is a company I've owned shares in for some years. The shares are currently trading at 1,539 pence, but the non-voting class of shares is considerably cheaper at 1,224 pence.
Like a lot of companies in the financial sector, Schroders' shares have risen strongly since the market sell-off earlier this year. Analysts are forecasting EPS of around 100 pence for the current calendar year, giving a P/E of just over 12 for the non-voting shares. The dividend is expected to be around 40 pence, giving a yield of 3.3%.
Schroders is due to release a trading update on Nov. 8. Ideally, I'd like to see the company on track to meet expectations, followed by a general market dip. Schroders is a "high-beta" share, meaning that when the market falls, its shares tend to fall further. Such an event could see Schroders' P/E drop below 12, at which point it starts to get interesting for me.
All the news
I bought shares in mid-cap media conglomerate Daily Mail & General Trust (LSE: DMGT.L ) in June this year. I wrote an article at the time explaining why I felt the shares were a bargain at 385 pence. They've since risen to 473 pence but still trade on a forward P/E of less than 10 and offer a prospective dividend yield of around 4%.
This is one of those situations where I wish I'd had more funds available to invest at the time! However, the shares have come off their recent high of 497 pence, and I'm tempted to buy a few more ahead of the company's full-year results, which are due to be announced on Nov. 22.
There shouldn't be any real surprises in the results. In a pre-close trading update in September, DMGT confirmed that the outcome for the year was in line with market expectations.
In June, I was convinced there was going to be an imminent opportunity to buy shares in Young & Co's Brewery (LSE: YNGA.L ) at a rock-bottom price. I told you all about the upcoming potential bargain in an article at the time, so I won't repeat the details here.
Young & Co is another company with a voting and non-voting share structure. When I wrote the article, the non-voting shares were trading at 515 pence, and net asset value (NAV) per share was 659 pence (or 616 pence excluding goodwill). Two days later, the non-voting shares went on offer in a placing at 450 pence a share and were briefly available on the open market for a little bit more than that.
Unfortunately, I missed the opportunity. Young's shares quickly got back above 500 pence and are currently trading at 553 pence. I can't see such a fantastic opportunity presenting itself again. However, the company is due to announce its interim results on Nov. 22, and I'll be looking to see at what discount the shares now are to the latest NAV.
More attractive assets
Mountview Estates (LSE: MTVW.L ) , whose business is centered on residential properties in London and the South East, is another undervalued assets play. The main part of the business is simple: Buy up properties with regulated and life tenancies, at a discount to their notional vacant-possession value, and then sell them when they eventually become vacant. It's a long-term strategy that has proved highly successful over many decades.
The main plank of the investment case is also simple: The last reported NAV per share was 5,828 pence, while the current share price is 4,538 pence -- a 22% discount. Furthermore, the vast majority of the property assets are carried at cost or net realizable value, whichever is the lower. With a good number of properties having been bought years ago, there's likely to be considerable hidden value in the balance sheet.
I'm tempted to add to my shareholding but will probably hold off until after Mountview announces its interim results on Nov. 29. I'll be looking at the latest NAV and watching the discount carefully.
Top sectors and top companies
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Further investment opportunities: