Professional analysts have more time, more data and better access to companies than most private investors. As such, the wisdom of the City crowd is worth paying attention to, because, ultimately, you’re either going with the pros or going against them when you invest.
Right now, Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US), Taylor Wimpey (LSE: TW) and Entertainment One (LSE: ETO) are among the darlings of the professional analysts.
Entertainment One
Entertainment One may be less familiar to investors than Lloyds Banking and Taylor Wimpey, but I’m sure readers will have heard of pre-school TV and merchandising hit Peppa Pig, and box office smash 12 Years a Slave.
Entertainment One, also known as eOne, produces and acquires TV, film and music content rights for international exploitation. This FTSE 250 group, which has a market value of getting on for £1bn, is rated a buy by five out of five analysts.
At a recent share price of 321p, Entertainment One trades on 15 times current-year forecast earnings, and analysts are expecting a positive Q1 trading update to be released this week.
Taylor Wimpey
Along with other housebuilders, Taylor Wimpey has made a strong recovery since the financial crisis of 2008/9. At a recent share price of 113p, the company is valued at £3.7bn, and is pushing for promotion from the mid-cap FTSE 250 index to the elite FTSE 100.
Over 80% of City experts rate Taylor Wimpey a buy, and no analyst has the company as a sell. Current-year earnings forecasts give a P/E of 11, falling to just 8 for 2015.
Analysts at Liberum have recently named Taylor Wimpey as their top pick in the sector, along with Bellway, which trades on a slightly higher P/E.
Lloyds Banking
Lloyds is currently the most favoured of the Footsie’s ‘Big Five’ banks, with well over two-thirds of City experts rating the ‘Black Horse’ a good bet.
Analysts at Deutsche Bank are not alone in making Lloyds their top pick in the UK banking sector. They say Lloyds “provides attractive and cost-effective exposure to a strong UK economy, a profitable banking market, strong capital generation, and potential write-backs on weak credits taken in the downturn”.
At a recent share price of 73p, current-year earnings forecasts give a P/E of 10, falling to 9 for 2015. Furthermore, analysts at Exane BNP reckon the past trend of earnings downgrades on asset disposals is set to turn, and that we’ll see upwards revisions going forward.