24th September 2015
Ian Forrest, investment research analyst at The Share Centre, revisits his five summer stock picks and evaluates how well they did over the mid-year months…
According to low-cost airline EasyJet the cool weather in the UK during August led to a large number of people seeking sunnier climes abroad. This has helped the company to achieve a record level of passengers during the month and stronger than expected revenues. In turn, that led to full-year profit guidance being raised once again to a range of £675m-£700m. The oil price is likely to remain subdued for some time and EasyJet is steadily increasing its capacity and going after more business travellers. The shares have outperformed the market since July, remaining as a ‘buy’ and one of our favourites in the sector.
Pubs and brewing group Marston’s also remains on our buy list, although ithas slightly underperformed over the last two months as the market has focused increasingly on the potential impact of the new living wage on the retail and leisure sectors. However, the company reassured investors in July that it had already taken steps in anticipation of the government’s decision to mitigate the additional costs. At the same time, Marston’s reported that trading had remained in line with expectations in the second half of the year. A further update is expected in a couple of weeks as the company’s financial year comes to an end.
Retail group Sports Direct International has recently provided an update which reported thattrading in the first half remained in line with expectations and full year profit guidance of £420m was maintained. The company continues to focus on large format city centre stores and expanding its distribution centre at Shirebrook, but it has had to battle with negative headlines about alleged poor treatment of some employees. Despite that, investors should note that the shares have outperformed over the summer and recent retail sales data indicated that clothing has been one of the strongest growth sectors over the past couple of months.
Investors will be pleased to see that Photo-Me International has also outperformed during the turbulent market of the past month. The finance director at the provider of automatic photo booths, Francoise Coutaz-Replan, stepped down unexpectedly in late August but is going to stay on as a non-executive director which should ensure a steady handover to the new FD.
Unilever endured a torrid time in August as the market reacted to concerns about the state of the Chinese economy. The group derives a significant portion of its revenues from emerging markets and reported positive signs of growth in Latin America and Eastern Europe in its last trading update in July.