Tuesday tips round-up: McBride, UK Stocks

1st Jul 2014 08:45

Steer clear of McBride. The private label household products outfit yesterday announced the exit from unprofitable product lines in the contract space, where it makes products for the likes of Procter&Gamble and Unilever. That will send contract revenues plummeting by 20% in the year to the end of June. On a more positive note, its own-label products saw flat revenues in the first three months of the year, as encouraging growth in the likes of France, Germany and Poland offset weakness in the UK. However, the fact remains that it has been taking a hit from the supermarket price wars. Hence, the contribution to revenues from that side of the business now stands at 11% versus 18% several years back and there are no signs of lessening margin pressures. At 5% the yield on the stock is attractive but not enough so given that little improvement can be expected in the core UK market, writes The Times' Tempus. Any high-performance undertaking requires the most precise instrumentation. Unfortunately, as financial markets careen higher central bankers have been systematically smashing all the dials. Hence the record low yields in high risk debt or depressed levels of volatility. The latter, when measured by the VIX, is at February 2007 lows, as central bankers flood the financial system with liquidity. In parallel, the Dow Jones Industrials continues to set fresh highs almost on a daily basis and the Footsie is nearing its all-time record. Yet that is not due to growth in profits. Earnings forecasts in the UK and Europe for over the next twelve months have come down by 12.5%, according to broker Charles Stanley. Companies meanwhile continue to splurge on share buybacks, increasingly financed by debt. Even when taking into account rising cash levels corporate net debt is above 2008 levels, research from Societe General shows. No, don't panic, but you may want to think about how to best safeguard your capital in the year ahead, says The Daily Telegraph's Questor column. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB