November looks like being a busy month for investors with a large number of the UK’s biggest companies providing updates on trading. Here are three FTSE 100 firms whose statements I suspect will be positively received.
Huge demand
Online vehicle marketplace Auto Trader (LSE: AUTO) is down to reveal its latest set of half-year numbers of 11 November. Based on the ongoing scramble for second-hand motors, due to the global shortage of computer chips for new cars, I’m struggling to imagine why the figures will be anything less than impressive. The question I’m asking therefore, is whether all this positivity is already baked into the share price.
I’m not so sure it is. AUTO’s stock is up just 5% in the last 12 months and currently changes hands for under 26 times earnings. Yes, that’s hardly cheap. However, I still think it’s reasonable for a company that, like its property equivalent Rightmove, has a clear stranglehold on its market. According to the firm, browsers spend seven times more time on its site than their nearest competitor.
Naturally, there will come a time when supply chains are fixed and market dynamics change. The potential for a protracted period of inflation may also push potential buyers to delay their next car purchase. Regardless, consistently high returns on capital and sky-high operating margins keep me bullish on AUTO for the long term.
Contrarian pick
A second FTSE 100 member that could push higher next month is luxury brand Burberry (LSE: BRBY). While I’m wary of being biased here (I hold the stock), I do think the recent confirmation of a new CEO has helped to reassure an already-skittish market.
If this can be backed up with some comforting but not necessarily outstanding interim numbers on 11 November, BRBY shares may be able to breach the 2,000p barrier. Now that its physical store estate is back up and running, I’m inclined to be optimistic.
Of course, a full recovery will take time. It will also depend greatly on what the fashion world/market thinks of Jonathan Akeroyd’s plans for the brand when he takes up his post in April. In the meantime, a resurgence in Covid-19 infections and hints of a return to lockdowns could put the brakes on any progress.Â
So while I believe the stock could move higher next month, I’m also keeping my expectations in check.
FTSE 100 value stock
A final FTSE 100 stock I’ll be watching is insurance firm Aviva (LSE: AV). Its shares are up 51% in the last 12 months as (some) confidence has gradually returned to the UK economy. Investors also appear to be impressed by CEO Amanda Blanc’s strategy for streamlining the company. Recent news that it achieved its best half-year sales in General Insurance for a decade was warmly received too.
However, like AUTO and BRBY, nothing can be taken for granted. Regardless of a bullish Q3 update on 11 November, the shares could still slide on global growth concerns. This includes the drawback of holding a stock whose fortunes will always be determined to some extent by wider market sentiment.
Notwithstanding this, it could be said that AV’s current valuation takes this into account. A P/E of less than nine times forecast earnings looks like a bargain to me. A chunky 5.6% dividend yield, based on analyst projections, is also attractive as higher prices bite.