As the colder weather draws in, the news flow from some of the biggest UK companies heats up. And this could mean their share prices are set for some big moves in November.
In which direction? Well, that’s open to debate.
Next
Reporting early next month is clothing and home retailer Next (LSE: NXT).
The fact that it scores consistently well on quality metrics suggests the £6bn cap is one of the best retailers in the entire UK market. Unfortunately, this is easily forgotten in a period of market malaise such as the one we’re in. The shares were down 41% year-to-date by the end of Friday.
This isn’t hard to fathom. As a general rule, any company that relies on discretionary spending tends to do badly during recessions. I don’t see Next being the exception here. And if sales have been even worse than anticipated, there could be more pain to come for existing holders. Full-year profit guidance was already reduced by £20m to £840m in September.
On the flip side, even a slightly better-than-expected statement on 2 November could be warmly received by a market desperate for something to smile about.
I’m content to watch rather than buy Next shares for now.
Taylor Wimpey
Top league housebuilder Taylor Wimpey (LSE: TW) delivers its latest update on 9 November. After halving in value in 2022, investors will be hoping for something, anything, to stabilise the share price.
I think they may be disappointed, at least as far as the outlook for trading is concerned. While completions may have been fairly steady over the summer, the recent rise in interest rates is likely to be impacting demand for new homes.
How much of all this is priced in? I suspect a fair bit. The stock already changes hands on a seriously low price-to-earnings (P/E) ratio of five. What’s more, it yields a forecast 11%, at least for now.
That last bit is important. While earnings should cover the payout, I’m wary of relying too much on Taylor Wimpey for generating passive income going forward.
Again, I’m keeping my powder dry until after that statement.
Halma
Last on today’s list of FTSE 100 stocks that I’ll be watching is Halma (LSE: HLMA). Of the three I’ve highlighted today, I’d say this company is the least cyclical. Halma specialises in life-saving technologies across three market areas: Safety, Environment and Health– not the sort of things that employers can afford to ignore thanks to increasing regulation.
Notwithstanding this, 2022 hasn’t been a vintage year for those already holding. The company’s valuation has sunk 35%.
Despite this fall, Halma shares still change hands at a P/E of 29. That’s still high, at least relative to many/most other UK-listed shares. While I do think this premium can be justified to some extent (Halma has an unbroken record of increasing its dividend by 5% or more for the last 43 years!), it’s still not ideal in the current climate. There’s a risk we could see a big move in the price if the half-year numbers on 17 November disappoint.
There is, however, something to be positive about here. Unlike Next, Halma retained its full-year guidance in September. Perhaps the worst is over.
Regardless, I still remain very interested in opening a position here.