Regular readers may remember my article from December where I highlighted three well established companies that I expected to do well over 2016 and beyond – Three Top Picks For 2016.
While I tend to review my positions when results and trading statements are released to the market, I also like to review my performance and the stocks that have driven that performance at the end of each quarterly period, as sometimes the market can throw up opportunities, especially during periods of volatility, and there has been no shortage of that recently.
The chart doesn’t lie
As we can see from the chart, things haven’t quite gone to plan for these three shares over the last quarter, but has anything fundamentally changed with the companies themselves, or does the market simply have other things on its mind?
A bank on the mend
February was a month of two halves for Lloyds Banking Group (LSE: LLOY) with the shares falling to three-year lows in the first two weeks of the month and then bouncing strongly along with the market, then stronger still when the final results were released on 25 February. The market seemed particularly pleased with the special dividend and generally more positive comments about how management expects the bank to perform against previous guidance.
Despite the recovery in the share price the shares still trade on a 12-month forecast rolling PER of less than 9 times earnings and are expected to yield over 6% according to data from Stockopedia.
Firing on all cylinders
Another pick in the doldrums during a volatile month was housebuilder Persimmon (LSE: PSN) as the shares fell with the market. However, as we have seen with Lloyd’s, the shares rallied strongly following a better-than-expected set of results and a significantly enhanced capital return plan. That’s something that we’ve also seen at sector peer Berkeley Group Holdings.
Following the results Mr Market, or more precisely analysts, have been upgrading EPS estimates leaving the shares trading on a forecast PER of less than 12 times earnings. And as the capital return plan has also been enhanced to return £5.50 between 2017 and 2021 inclusive, the shares still yield over 5%.
Exposed to the volatility of the market
The underperformer of the group by a fair margin is investment manager Jupiter (LSE: JUP). Its shares have underperformed despite strong results that saw it increase assets under management (AUM) to just shy of £36bn and inflows of £1.9bn with margins remaining at 51% of EBITDA and an underlying increase in the full year dividend to 25.5p.
All that said, the market looks forward and it has to be said that Jupiter is a geared play on the health of the markets. Even if the company manages to outperform I could still see the shares underperforming in a difficult or worried market.
However, should the market rally then the opposite would be true and shareholders could well see a sector-beating performance over the rest of the year with a yield just shy of 6% while they wait.