The last few weeks have seen a flood of company news hit the markets, as earnings season cranks into life. Several of the stocks in the SIF portfolio have been affected, some positively and some less so.
This week we’ll see how that news has affected the outlook for two of these shares, consumer goods group McBride and education services firm RM.
As it’s the last week of the month, I’ll be reviewing all of the stocks which have been in the portfolio for nine months or longer:
Housebuilder Redrow
Consumer goods maker McBride
Education software and services firm RM
FTSE 100 defence group BAE Systems
Here’s how these four firms have shaped up during their time in the portfolio:
It’s a pretty mixed picture. So let’s drill down and take a closer look. Which of these stocks will remain in the portfolio for February?
Redrow
Housebuilder Redrow is up 26% plus dividends after 10 months. The shares have slipped back a little since December’s review, but this stock remains a strong contributor.
It’s not clear to me how likely further gains are, but profit forecasts for the year are bullish, suggesting earnings growth of 11% for 2017/18 and 9% for 2018/19.
I’ve long since given up trying to predict a market top in this sector, but one thing I have noticed is that several of the big house builders are speeding up production. For example, Taylor Wimpey recently noted that “we have increased the pace of production so as to meet market demand”. Strong demand is a legitimate explanation, but another possible reading of this is that these firms are starting to sense that the market may be peaking.
If that was the case, they’d want to convert work in progress into cash as quickly as possible. This view might fit with last year’s insider sales by Berkeley Group’s Tony Pidgley and Rob Perrins (total £44m) and founder-chairman Steve Morgan at Redrow (£153m).
Stockopedia’s algorithms continue to like Redrow stock, awarding it a StockRank of 96 and a StockRank style of Super Stock. Redrow also has a RiskRating of Adventurous. This combination has performed strongly in recent years, as Ben Hobson explained in this article.
Given this, housing bulls will be pleased to hear that Redrow…
