5 FTSE 100 Shares for the Week Ahead
Jan 25th 2013 11:40AM
Updated Jan 25th 2013 1:00PM
LONDON -- After a couple of weeks of looking for Christmas trading figures, we move into important company results next week, mainly toward the end of the week. We have FTSE 100 companies bringing us full-year, half-year and quarterly results. Hopefully, we'll see positive reinforcement of the FTSE's strong start to the year, and should look out for rising dividends.
Here are five FTSE 100 companies all bringing us updates next week:
Pharmaceuticals giant AstraZeneca is due to report full-year results on Thursday. The share price has been a bit stagnant for a while, standing at 3,153 pence today. That's largely been due to concerns over the company's pharmaceutical development pipeline and the threat from generic competition. With the industry moving away from the traditional "blockbuster" pharmaceutical model and toward newer biotechnologies, it has been widely thought that AstraZeneca has not been progressing as well as its main U.K. rival, GlaxoSmithKline.
But there have been some positive pharmaceutical results over the past year, revenue and earnings were down at the third-quarter stage but no more than expected, and the downward trend in earnings is expected to bottom out by 2014. Forecasts put the shares on a pretty low price-to-earnings (P/E) of around 8 to 9 over the next couple of years, with dividend yields of around 6% expected.
Royal Dutch Shell is due to release full-year results on Thursday, and there really shouldn't be any surprises. Third-quarter earnings, announced in November, were down 15% from $7.2 billion to $6.1 billion (on a "current cost of supplies" basis), but that was pretty much in line with expectations.
Profits are erratic in this business, and the City expects to see earnings per share fall for the year to December, by 11%. But there are modest rises lined up for the next couple of years. And looking at Shell, what strikes me about its valuation is a low P/E of under 9.
Shell is expected to yield around 5% in dividends, and that should be well covered. But with its strong cash flow, Shell always keeps its dividend up even when in years when earnings are down. With Shell shares down a few percent over the year to 2,300 pence, they look cheap to me.
We should be getting interim figures from British Sky Broadcasting on what is going to be a busy Thursday. The company has had a pretty good year so far, with the shares up nearly 20% to 795 pence over the past 12 months.
After years of growing earnings and dividends, we're looking at a forecast earnings per share rise of 10% for the year to June, with a further 6% penciled in for the following year. That puts the shares on a P/E of 14, which is about the FTSE average, but does not look expensive for shares offering a dividend yield of around 3.5% -- not the biggest in the market, but twice covered and safe.
BT Group is another FTSE 100 giant whose shares have soared this year -- they're up over 20% since the same time last year, to 251 pence. The company has been recovering fast over the past few years, with earnings having grown steadily since the bad year of 2009, and for the full year to March we have analysts forecasting a rise of 36% to 24 pence per share.
On Friday, with the release of third-quarter results, we should be closer to knowing how realistic that is. There's a big rise in the dividend expected, too, with a predicted yield of about 3.9%, and payouts should be safe for the next year or two at least. For the longer-term future, well, that will depend on the battle for the next generation of super-fast broadband.
Our fifth company for this week is United Utilities , which is due to release an interim update for the period from Oct. 1, and again there shouldn't be anything surprising. Although the share price has progressed well over the past year and now stands at 730 pence, to most investors United Utilities is seen as a cash cow.
Like the other utilities providers, United has an essential product and a pretty much captive audience, and pays the bulk of its earnings out as dividends. Forecasts for this year suggest a 4.8% yield, creeping up over the 5% level next year, and that has to be one of the safest dividends in the market.
Finally, the secret to becoming rich from shares is simple long-term investing in fundamentally sound companies, and letting steady growth and dividends power your wealth upwards.
That's why it's always worth keeping abreast of what news is coming our way each week, and doing some background research on promising-looking candidates.
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The article 5 FTSE 100 Shares for the Week Ahead originally appeared on Fool.com.Alan Oscroft has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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