A new week has brought new optimism to this weekly column, helped by the release of Telecom Plus financial results. The best performing stock in the FTSE 350 has had a stellar first half and investors will enjoy the benefit of its strong performance with a significantly higher dividend.
This week we will also run through the numbers from:
- London office landlords: Great Portland, British Land and Helical
- Building materials suppliers: CRH and Kingfisher
A more settled week for the economy has helped the London Stock Exchange regain its crown as the largest investment market in Europe - the reign of the Paris market didn’t last long.
Telecom Plus: Reaping the good time rewards
Telecom Plus (LON: TEP) is the top performer in the FTSE 350 in the year to date. Investors who bought at the September 2021 low point (soon after the company had reported a drop in revenue and earnings for the year to March 2021) have more than doubled their money.
The multi-utilities provider (which trades to consumers under the name Utility Warehouse) has - to a certain extent - been in the right place at the right time. The company has been able to offer cheaper fixed energy tariffs than peers because it bundles together many different utility contracts. These fixed tariffs (which have even captured the attention of the UK’s money saving man, Martin Lewis) have been in incredibly high demand amid the UK’s energy-fuelled cost of living crisis.
Telecom Plus has therefore enjoyed the dual benefit of rising demand (because its prices are lower than competitors) and rising prices (because the underlying price of energy has soared). Management doesn’t say how much of the 52% increase in revenue in the first half came from price hikes and how much came from new customers, but the energy division certainly played a big role in the strong performance. Out of the 292,000 new contracts added in the period, almost 170,000 came from energy. As of September 2022, Utility Warehouse was servicing 1.4m energy contracts, compared to 1.1m at the same time last year.
And because Telecom Plus bundles its utility contracts, the other divisions have benefited too. Mobile and broadband contracts are up 18% and 5% to 364,000 and 341,000 respectively, while insurance contracts have leapt 67%, albeit from a much lower base. It’s these contracts (which are relatively expensive) that allow Telecom…
