A number of companies I have covered in the recent weeks release updates in October. I am looking forward to these. They could help me reflect on my view on these FTSE 100 stocks and also present good buying opportunities.
Tesco’s first post-lockdown update
The first of these is the UK’s biggest grocer, Tesco. The company had warned us early in the year that its sales growth could slow after last year’s lockdown boost. This showed up in its trading update released in June. Its like-for-like (LFL) sales, which measures underlying growth by only considering it across the same stores, increased by only 1% for the 13 weeks to 29 May year on year.
When it releases its interim results next week, I would like to know how its sales have fared now. With the economy on the path to recovery, they could have continued to show an uptick. However, rising prices may just have increased its costs, which can impact profits. Either way, it would be good to know the retailer’s progress in its first post-lockdown update. It could also tell me whether my assessment of the stock needs revision or not.
Mondi’s price problem
The second is the FTSE 100 paper and packaging provider Mondi, which releases its trading statement next week. Here too, I am interested in how far inflation is impacting it. Earlier this year, it had flagged the risk of cost increases. Then in August, when it released its half-year results, the company was more confident and said that it had been able to pass them on.
Whether these price increases have been well received by its customers or not will become clearer in its trading update. This is a particularly interesting stock to wait for, because inflation concerns have only risen since its last update. Besides reflecting on the stock itself, this could also be an example of how price trends are impacting FTSE 100 companies as such.
Will Rio Tinto finally deliver good news?
The third one is the multi-metal miner Rio Tinto (LSE: RIO), whose share price has fallen some 25% since August. This has sent it tumbling back to levels last seen a year ago. One reason for this is that it has come under the Financial Conduct Authority’s lens for potentially misleading investors about the cost escalation in its massive copper project in Mongolia. And this cannot be taken lightly either. Its FTSE 100 peer Glencore experience ongoing share price damage for a few years, at least partly because of bribery allegations, not very long ago.
Another reason is the China effect. FTSE 100 miners have had some challenging days at the stock markets recently as public spending in the country winds down. Additionally, the near collapse of the Chinese property developer Evergrande could have weakened investor faith in companies whose fates are closely connected to the country’s economy.
But Rio Tinto releases its operational update in the second week of October. If it turns out well, I think investor faith in the stock may return. As a shareholder in Rio Tinto, I have particular interest in this stock.