The FTSE 100 financial calendar will be providing us with a few gems in November, and here are three I’m keenly anticipating for different, but specific, reasons.
Defensive
First up is Associated British Foods (LSE: ABF), whose full-year results should be with us on 5 November, and the City is expecting something largely unchanged from last year.
The company runs two distinct divisions, its foods business and the unrelated Primark low-cost clothing chain. While the latter is usually the star, I do like the defensive nature of the food business too, and it’s a rare example of a business split of which I actually approve.
I particularly want to see how Primark is doing, as it’s some way from the discretionary fashion end of the spectrum and covers the must-wear basics. I expect it to be significantly less affected by the high street downturn than more upmarket and higher-margin brands, and a pre-close update in September indicated an expected 4% rise in Primark sales.
Associated’s safety aspect is, I think, reflected in the stock’s forward P/E of 16, even with dividend yields unexciting at around 2%, and I’m hoping for ‘business as usual’.
Speculative
Next up is Aveva Group (LSE: AVV), a software company I recently cast my eye over. My interest here is based on the rarity of seeing a technology-based growth stock on the FTSE 100 soaring the way Aveva’s shares have — and I’m looking for evidence to decide whether it’s a genuine growth opportunity or an overpriced bubble.
A trading update on 24 September showed no indication that the wheels are set to come off this year, but we really need to see the full first-half figures due on 12 November.
What I fear about Aveva is that investors seem particularly sensitive to any hint of weakness, and we’ve seen some cliff falls in the share price over the past couple of years. With the share price having accelerated in 2019, gaining 70% since the start of the year, the current forward P/E valuation of a shade under 40 suggests any future imperfections could lead to a big crash.
I’m still staying away, but I’m watching closely.
Electrifying
I’m a fan of utilities companies and we have a few reporting in November, including United Utilities , Severn Trent and National Grid. But electricity and gas supplier SSE (LSE: SSE) is the one I’m most keen on, as it should provide the best indicator of how the sector is handling competition from smaller companies and their often more agile marketing. And that really does seem to be the biggest threat (other than perhaps that of nationalisation should Jeremy Corbyn’s Labour party win December’s election).
First-half results are due from SSE on 13 November, with the City expecting a 30% rebound in earnings per share after two years of slump. The share price has been picking up in the past few months, but dividend yields are still very high at more than 6% — and with the shares still down compared to five years ago, I think we’re still in a bargain buying period.
The dividend isn’t well covered by earnings, and though that’s usual for utilities, it is a risk. But that kind of pressure should lighten if forecasts prove accurate and cover rises to 1.2 times by March 2021.