Insights for December 2015

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Posted by ShrutiAggarwal on 16 December 2015, 5:42 PM

A risky bet

Sirius Minerals Plc is a United Kingdom-based fertilizer development company and has a market cap of £342.5 m. The Company is primarily focused on the development of polyhalite deposit, The York Potash Project. The Company operates through two divisions: the UK segment, which consists of the York Potash related activities and the corporate operations, and the Rest of World, which includes the Company's other overseas interests.

Sirius Minerals Plc is mainly for the less risk averse investors. The UK based fertilizer producer has traded in a wide range between 6.40p-29.50p over the past one year. Currently the stock is trading at 134% above its 52 Weeks low and 97% below its 52 weeks high.  Sirius Minerals finished at 15.0p a share, up 3.45% on Tuesday, 15th December 2015. The company has 50 days moving average of 17.72p and 100 days moving average of 17.63p. Sirius minerals PLC had shown a spectacular rally in the year 2015, as the shares had risen by 250% from 6.40p to 25.0p. However the stock had rallied so much mainly on account of the positive news flows regarding the proposed potash mine in York. Though there have been a few roadblocks with the decision process, but now the company has received all the required consents and can go ahead with the £1bn project. However after the spectacular rally, the stock seems to head for a correction and according to a few analysts, fiscal 2016 might not be as superb as the last year. In the November 2015, the company received an ‘outperform’ rating from Macquarie with a target price of 25 pence which indicates an upside of up to 78% from the current levels.  (Read more)

Other Insights on Related Shares: SXX.L

It has been called the biggest merger in history for two oil companies, at least since ExxonMobil (XOM) took over XTO energy over 5 years ago to create the energy behemoth it is today. Royal Dutch Shell’s (RDS.A) proposed acquisition of gas company BG group (BRGYY), announced on 7 April 2015, is still navigating the regulatory systems of half the globe, getting green lights from the national regulators wherever it goes. Yet, despite all the fanfare, investors haven’t reacted particularly happily to the deal. In fact, Shell has lost a quarter of its value since plans for the merger were first made public, with shares slumping from a high of 2,094p in April on the day of the announcement of the deal to a low of 1,418p on 14th December. See chart.

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Topics: Oil, Shell
Posted by ShrutiAggarwal on 14 December 2015, 4:49 PM

Limited potential to rise

National grid plc is fairly priced at the current levels, with an upside of merely 10% from the current levels. The stock has shown a spectacular rally by rising over 66% in the last 5 years, but now it seems it would start consolidating at the current levels and might head for a correction. The stock finished trading on London stock exchange at 909 pence on Friday. Currently the stock is trading at 5% below its 52 Weeks high and 11% above its 52 weeks low. National Grid Plc is an electricity and gas utility company and has a market cap of £34.14Bn. The UK Electricity Transmission includes high voltage electricity transmission networks in Great Britain. Its UK Gas Transmission provides the gas transmission network in Great Britain and UK liquefied natural gas (LNG) storage activities. National Grid has a forward P/E of 15.13 which is slightly up compared to FTSE 100 P/E of 13.37. National Grid Plc has a trailing P/E of 15.88.

The company has five business segments namely: UK electricity transmission, UK gas transmission, UK gas distribution, US regulated and other activities. Out of all the segments, the group generates 46% of its revenue from US regulated and 29% from UK electricity transmission. The company generates over 85% of its revenue from US regulated and UK electricity transmission, therefore the US is one of the biggest markets for the company. However throwing light on the latest half year results of the company, the company continued delivering strong performance in the first half of the year. The company’s adjusted EPS was up by 22% in H1’2015 compared to a year ago. The capital investment was £1.9 bn in H1’2015, up by 17% compared to a year ago. Also it reported strong balance sheet and financial matrix in H1'2015. The company reported strong operating cash flow of £2.681bn in H1’15, up by £114 compared to H1’2014. The company is also undergoing some restructuring as the company is planning to sell its major stake in the UK gas distribution business. According to the management, post-sale, National Grid’s product portfolio will have a higher asset growth and the company would strengthen its foothold to deliver strong returns in the future. Also the UK gas distribution business is a mature business model with strong cash flows and attractive return on equity. Therefore the sale of UK gas distribution business would generate attractive returns to the shareholders. The proposed sale is likely to be completed by 2017. The company has also maintained a steady dividend yield of 5% in the historical years which is a feast for an income oriented investor. Also, National grid has outperformed, compared to its peers like Centrica Plc is worth 35% less than 5 years ago whereas national grid stock has risen by 66% in the last 5 years. Currently, the stock has a consensus rating of ‘Hold’ and a target price of 914 pence. (Read more)

Other Insights on Related Shares: NG..L
Posted by ShrutiAggarwal on 8 December 2015, 11:16 AM

A compelling buy with an upside of upto 40%

Rolls Royce is a compelling buy with an upside of up to 40% from the current price levels. The stock has gone through huge correction starting from April 2015 and finally it started consolidating now when last week it had given the breakout at 555 pence. The stock finished trading on London stock exchange at 598 pence on Thursday. Currently the stock is trading at 43% below its 52 Weeks high and 19% above its 52 weeks low. Rolls Royce has a beta of 0.84 which also explains that the stock prices have been less volatile compared to the index.

Rolls-Royce plc is a United Kingdom-based company that designs, develops, manufactures and services power systems for use in the air, on land and at sea. The company has a market cap of £11 B and has two business divisions namely: Aerospace and Land & Sea. The Aerospace Division produces aero engines for large civil aircraft and corporate jets and provides defense aero engines and services. The Land & Sea Division comprises power systems, marine and nuclear businesses. The company generates 68% of the revenue from the aerospace division and the remaining 32% of the revenue is attributable to the land and sea division. (Read more)

Other Insights on Related Shares: RR..L
Posted by ShrutiAggarwal on 8 December 2015, 8:05 AM

Fairly priced BP PLC

BP PLC is fairly priced at the current levels considering the weak performance of the company in 2015 so far. BP PLC is trading 52% above its 52 W low and 22% below its 52 W high. The company finished trading in the London stock exchange at 350p a share on Monday. However, based on the fundamental analysis and valuation we do not see an upside of more than 25% from the current levels.  BP p.l.c. is an integrated oil and gas company and has a market cap of £ 70.66 b. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants and the petrochemicals products used to make everyday items, including paints, clothes and packaging. The Company has three business segments namely, Upstream, Downstream and Rosneft. However, over 80% of the company’s revenue generates from the downstream segment. The Company's Downstream segment's activities include the refining, manufacturing, marketing, transportation, and supply and trading of crude oil, petroleum, petrochemicals products and related services to wholesale and retail customers.

 Like the other oil and gas companies, falling oil prices is a big concern for BP PLC also, as it got validated by  the weak 2014 and cumulative third quarter 2015 results respectively. The company’s topline fell in 2014 compared to 2013 mainly because of falling crude oil prices and lower volumes. However the silver lining in the cloud was the company’s strong balance sheet and gearing ratio within the target range of 20%. The company had a gearing ratio of 16.7% in 2014 which indicates towards its financial stability.  Despite the challenging macro and tough market conditions, BP PLC reported positive cash flow from operations in the first nine months of 2015. BP PLC reported positive cash flows from operations in cumulative third quarter 2015 at $13.327 B versus $25.507 B. Though cash flows have fallen significantly compared to the last year on account of volatility in the oil prices.  BP PLC would seem to be on track once we see some stability in the oil prices.  Another good thing about the oil and gas giant is the stable and steady average dividend yield of approx. 6.5% in 2013 and 2014 respectively.  Despite the negative earnings in 2015 so far, company has full plans to maintain the same in the coming fiscal years as well. BP PLC has already announced the dividend of 30 cents per share in cumulative third quarter 2015. (Read more)

Other Insights on Related Shares: BP..L
Related Shares: Bp Share Price
Posted by MaxMarioni on 8 December 2015, 7:19 AM

Broker's stock surge: A sign of Things to Come?

2015 isn’t associated with large scales of activity in the stock market: indeed, since the summer investor panic in Asia and the perennial fret over the weakness of the recovery globally, and in particular in the Eurozone, prudence has reigned amid investors and in company boardrooms. Volumes of mergers and acquisitions have been low, while fewer companies have chosen to go public. So it is significant that a market maker specializing in stock flotations and M&As has posted surprisingly positive annual results. Numis Corporation (NUM:LN) , which has its stated goal as being  the advisor of choice for UK companies, has seen its revenue increase from £92.9m to £98.0m and statutory profits before tax soar from £24.4m to £26.1m.

Shares in the brokerage and advisory firm, which trades in the LSE’s AIM, rose by almost 4% in earnings per share to 24.9 p since publication of its yearly results. According to media estimates 8,986 shares were exchanged during intraday trading. The CEO, Oliver Hemsley, stated that “the performance of the stock market was variable during the year but our high quality client base was active and our current deal pipeline is strong. By strengthening our franchise across UK companies of all sizes, we have established Numis as an advisor of choice for businesses seeking capital to grow." (Read more)

Other Insights on Related Shares: NUM.L
Related Shares: Numis Share Price
Posted by MaxMarioni on 7 December 2015, 7:20 AM

High Flyer of the Week: Thomas Cook Group

In a remarkable turnaround, Thomas Cook Group PLC (TCG.LN) has gained the headlines last week by staging a record rise in the value of its shares. Stocks in the travel company rocketed up by almost 11% to 107.7p, its highest increase in a single day’s trading since March and the highest overall increase in the FTSE 250 index on that day (Wednesday 25th November). The stock continued to climb to 117.90p on the close of Friday 27th November. The surge in value of the travel agent was driven by the publication of its annual profits which revealed the group had netted £19 million pounds in after tax profits. It was the first profit recorded by the company in five years and compares especially well with last year’s results, when the group posted a loss of £115m.

  (Read more)

Topics: Tourism
Other Insights on Related Shares: TCG.L
Related Shares: Thomas Cook Share Price
Posted by MaxMarioni on 7 December 2015, 7:14 AM

A Look at the Biggest New Stock of the Year

 It has been described as the biggest UK IPO of the year and the biggest ever financial technology IPO to take place in Europe. The buzz surrounding the flotation was so great that even the PM tweeted about it. This is, Ladies and Gentlemen, Worldpay.

(Read more)