It's not Christmas Yet
11/27/2003
Last week I examined momentum and value-growth stocks. I wanted to say a few words on yield this week following a reader question. As we found out this week the MPC voted 8-1 for the interest rate rise.
Nevertheless what about income from stocks to beat banks? My criteria is not only yield (ie the amount through dividends you get for £100 of stock you own, eg a yield of 5%, means £5 per £100 of stock) but also ensuring the stock is not about to drop in price, otherwise you gain income and lose capital.
So what looks interesting?
Yielding Results
Well, let me kick off with Small Caps. With 8-9% per annum and with a gentle uptrend this year includes James Beattie, but beware any fall below support levels to say 125p.
UK Coal too is looking good on yield and price strength, although some falls recently after an incredible rally this year. The price-earnings is high at 41, but price earnings growth only 0.25.
British Polythene Industries gives you yield plus price stability as does another name you may not have come across – Metalrax.
Other names worth examining – The Malcolm Group, and Blick.
As for FTSE 350, for those wanting more blue chip companies, those yielding over 6%, not an excessive valuation and price growth or stability:
- Novar – watch to ensure the uptrend continues
- DFS – has fallen back but does not mean will continue falling given the yield
- Viridian – again strong uptrend
- Kelda – a sideways move so one would look to make a return from the dividend
- Investec – another strong return
- Pilkington – once again, strong returns
So there you have some sound players. Okay, what about value-growth superimposed on top of them – do we have any on both lists?
No, Holiday Break comes up on the FTSE 350, but only has a yield of 4 – not a problem if we expect the stock to rise.
Recent moves on FTSE 100
Despite pressure on the FTSE 100 (I guess fund money is waiting a bit longer before getting in before next year) British Land shows strength and a 2 month 600p target is a serious possibility.
Land Securities is another play moving higher, this time a lot closer to resistance and we must be careful it ensure it does break through the level.
For the FTSE 100, I am still placing odds in favour of a close between 4450-4550.
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