What do Betfair Group (LSE: BET), Greggs (LSE: GRG) and Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) have in common?
Answer: they are among the top risers in the FTSE 350 over the last month:
|
Company |
1-month gain |
|
Betfair |
+32% |
|
Greggs |
+18% |
|
Standard Chartered |
+14% |
|
FTSE 350 |
-0.5% |
After such rapid gains, I’m asking whether it’s too late to buy into these stocks — or whether shareholders and new buyers can expect further gains over the coming months.
Betfair
Shares in online gaming specialist Betfair have been on an upward path since May last year, when they traded at less than 1,000p.
However, the firm’s share price really took off on March, when Betfair issued an upbeat trading statement, declaring that full-year EBITDA is now expected to be between £113m and £118m — 15% higher than the firm’s December forecast of £97m-£103m.
The shares have now risen by 113% over the last year and look quite pricey to me, on 32 times 2015 forecast earnings. I’d be tempted to take some profits, especially as City forecasts suggest earnings per share could fall slightly next year.
Greggs
The high-street’s favourite baker is trying to steal market share from the likes of Costa Coffee, by introducing better coffee and improved takeaway food offerings.
Full-year results at the start of March showed that Greggs had beaten City expectations yet again, with a 5.5% increase in total sales, a 41.1% increase in pre-tax profits and a 12.8% rise in the dividend.
Gregg’s shares have now doubled over the last year, but City analysts believe there could be more to come, and are forecasting a 13% rise in earnings per share in 2015, along with a more modest 3% hike in the dividend.
Trading on 21 times forecast earnings, Greggs shares aren’t cheap, but I wouldn’t bet against further gains — the shares remain a buy, in my view.
Standard Chartered
At the start of 2015, Standard Chartered traded at a 20% discount to book value, and on less than 10 times forecast earnings. I rated the bank as a clear value play.
Since then Standard Chartered shares have gained 15%. The appointment of a new chief executive, Bill Winters, along with a solid set of results which weren’t as bad as some investors expected, have helped to calm City nerves about the firm’s exposure to bad debt.
Standard Chartered’s shares currently trade on 11 times 2015 forecast earnings, and offer a prospective yield of 4.6%. In my view, the potential upside outweighs the risks, and Standard Chartered remains an attractive buy.