The stock market generally goes quiet over Christmas, making it a good time to disconnect and focus on real life... But with nothing much happening from day to day, it’s also a good time to take stock of how your portfolio has performed, and consider your plans for the year ahead.
I’m hoping to take a detailed look at my personal portfolio over the New Year break, but before then it’s time for me to deliver the monthly review of the SIF portfolio. After a strong month for markets generally, who’s in and who’s out?
There are three stocks up for review this month. Each company name is linked to my original article on the stock:
- Bathroom fittings group Norcros
- FTSE 100 defence giant BAE Systems
- Gold miner Pan African Resources
Norcros and BAE have now been in the portfolio for six months, so are due an initial review. Pan African Resources has been held for longer, so is kept under review each month.
Norcros
Bathroom fittings group Norcros seems to be a perennial value stock. Always cheap, but always battling against poor sentiment (and a big pension deficit). Performance has stayed true to form during the stock’s time in the portfolio.
November’s interim results showcased a 10% rise in pre-tax profit and a 9.1% hike to the interim dividend. Norcros now trades on a rolling forecast P/E of just 6.6, and offers a prospective yield of 4.3%.
The market seems unwilling to give Norcros credit for steady earnings growth
Net debt is low and high single-digit earnings growth is expected next year. Higher bond yields could soon cut the pension deficit. But Norcros shares remain resolutely cheap, on a forecast P/E of just 6.5 for 2017/18. I’d be happy to continue holding this stock, but the company’s weak share price performance has left it with a negative 1year relative strength. As a result, Norcros has fallen out of my stock screen and must now be sold.
The group’s shares have fallen be about 1.5% during their time in the portfolio. However, July’s interim dividend payout of 4.4p per share was worth £1,214.27. This equates to a return of 2.4%, and lifts the total return from Norcros into the black (just).
Verdict: Sell
Total return: +0.9%
BAE Systems
The portfolio’s virtual investment in BAE has proved to be very well timed. Shares in the defence…
