And it was all going so well when I left my trading desk yesterday morning, with investors reacting positively to the news of the meeting between Saudi and Russian officials. This initially caused oil prices to rise as much as 6% on hopes that production would be cut in order to reduce the current oversupply in the market. However, the formal announcement was welcomed with less optimism as investors took the view that the deal may not remove a significant number of barrels from the market. This sent Brent crude into negative territory, and off by around 4% to just over $32 a barrel, a 10% intraday swing.
Getting company-specific
I think it’s fairly safe to say there will be some traders out there nursing a rather painful loss on the news. This is why I prefer to invest for the long-term and wait to see what management has to say about how the company is trading, not buy or sell on a single event or piece of news.
The good news, to my mind at least is the fact that there are results and trading updates aplenty at this time of the year, and I’ve selected three I think are currently looking interesting.
As we can see from the chart below, Centrica (LSE: CNA) has underperformed the market of late, cutting its dividend along the way. BAE Systems (LSE: BA) has broadly tracked the market over the last 12 months, buying back shares along the way. And Indivior (LSE: INDV) has fallen from grace mainly around concerns about delays to product development. To a lesser extent there’s also general negativity in the sector following comments from US presidential hopeful Hillary Clinton. She’s promised to hold drug companies accountable so they get ahead by investing in research, not jacking up costs.
Great expectations?
Interestingly, earnings expectations for both Centrica and BAE Systems have been reducing throughout the course of the year. Once market volatility has been factored-in to the mix, investors may well be positively surprised when both companies release results tomorrow – indeed even results that are only slightly better than expected can do wonders for the share price.
In a bizarre twist, earnings expectations over at Indivior have been increasing over the last 12 months as management continues to guide the market higher as generic competition in the space is not as damaging as feared. Yet the share price has fallen from highs of around 250p to 143p as I type.
Dividend appeal
As we’ve seen with Indivior and Centrica, recent market volatility and company-specific news have seen the share price sink and the prospective dividend yield rise, to 5% and 6%, respectively. And though BAE systems has tracked the blue-chip index, the shares still yield over 4%.
You should never buy a share purely for the yield, but I do think that this basket of shares is worthy of further research for those of you prepared to invest over the longer term.