26th October 2015
Ian Forrest, investment research analyst at The Share Centre, tips five stocks that may benefit from the winter months…
Christmas is only a matter of weeks away and it’s the time of year that most of us tend to start contemplating what gifts to buy. As more and more people prefer to shop from the comfort of their own home rather than brave shopping centres, it’s likely that online companies such as Findel could benefit.
The multi-channel retailer trades across three divisions, Express Gifts, Kitbag and Education and sells a wide range of products.
Whilst the latter divisions have been struggling recently, investors should acknowledge that the Express Gifts division continues to perform well and the group will be hoping for a further seasonal uplift.
Findel is expected to see strong earnings growth over at least the next three years but investors should be aware that whilst a lot of work has been done to stabilise the group, there is still a lot more to do. The company continues to focus on cutting costs and improving distribution channels demonstrating it has potential for further growth.
As the largest tourism group in the world, TUI will be preparing for one of its busiest periods as UK holiday-makers make plans to escape the cold weather and prepare to snap up the best deals for their summer holidays.
Growing online bookings and the improvement programme are helping to lift profits, in fact investors should note that bookings for the upcoming winter holiday season are in line with expectations with prices up 4% on last year. Furthermore, the current weak Euro is making European holidays even more appealing to UK customers.
Interested investors will be aware that the group reported an encouraging trading update in September, revealing that it remained confident of delivering 12.5%-15% growth in full year operating profits. Additionally, the merger with the German parent group is progressing well and that scale should lead to cost savings and a wider range of holiday offerings for customers. Record customer satisfaction levels are also helping to boost demand.
Independent pub brewing and food retailing company Marston’s will be hoping to make a killing over the next few weeks as friends, colleagues and families come together to have a tipple or a meal courtesy of the festive season.
The group operates an estate of 1700 pubs across the UK which it has been transforming by developing franchise style pubs which focus on food and drinks, while disposing of older drinks-led pubs.These now generate roughly 75% of the company’s profits and give it better control over the retail offer.
The group recently confirmed that it continues to perform in line with market expectations and its CEO Ralph Findlay remains positive on future growth as the company looks to exploit the growth in premium and craft beers.
Marston’s continues to benefit from the steady strengthening UK economy and although total reliance on UK consumers does increase the risk, rising wages, higher disposable incomes and a good level of consumer confidence should all have positive impacts on the company.
As the nights draw in, there will be many of us that decide to shelter from the cold weather and opt for a night in front of the television instead.
Sky is Europe’s leading entertainment company and with the endless amounts of sports, movies and boxsets it offers, through a vast amount of channels, it is bound to perform well. Investors should note that as well as its core satellite offering, the group is continuing to build its broadband and telephone operations.
As a result of last year’s expansion into Europe, the group now has over 20 million customers, 973,000 of which were added over the last year. Sky has had to dig deep to keep the right to broadcast the majority of football matches since the emergence of BT, however it is reacting to growing competition by introducing a number of new initiatives.
The ability to win new customers and more importantly, to upgrade to a single package, along with the expansion of product, leads us to believe that the share price could again continue to head in the right direction.
Food and drink gifts are always a favourite at Christmas time, so it is likely that global alcoholic beverages group Diageo could benefit. The company has a wide product range including many well-known brands such as Johnnie Walker, Guinness, Smirnoff, Baileys and Captain Morgan.
Furthermore, the group has a good geographical diversification with exposure to large, developed markets such as the US as well as fast-growing emerging markets in Asia and Africa. Investors should note that the downturn in emerging markets and a small decline in US sales has had an impact on the company however, it is forecasting a return to growth this year.
Diageo is well placed for increased demand for spirits in the US and the company plans to develop and de-layer the organisation to deliver further operating efficiencies. The strength of its brands, excellent long-term prospects for emerging markets and continued improvements in cost-cutting mean it is a favourite in its sector for us.”