Mindful Money’s Monday share tips: Dixons, Standard Chartered, Imagination Technologies & Bunzl

23rd June 2014


With electronics retailer Dixons publishing it full-year results on Thursday investors will be keen to hear how its proposed merger with Carphone Warehouse is progressing.

It is expected that European regulators will give the £3.6bn deal the all clear this week allowing the FTSE 250 group to hopefully report some of the finer details of the agreement.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers says: “Management previously outlined the rationale to create a group able to serve customers as the market for smartphones, tablets and other connected devices converges with that for electrical appliances, along with cost savings.”

However, Bowman notes that when it delivered its full year trading and merger update back in mid-May, investors appeared unconvinced and the share price declined by around 10% on the day.

But over the past year the Curry’s and PC World owner has witnessed its stock rise by 33% and with underlying full year pre-tax profit predicted to increase by 81% to £171m, ahead of the results analyst opinion is firmly pointing towards a ‘strong buy’.

Prior to Dixons latest update, its fellow FTSE 250 constituent Imagination Technologies delivers its own set of fourth quarter numbers on Tuesday.

Stock in the tech hardware and equipment group is currently in ‘neutral’ territory according to the broker consensus on share data hub Digital Look. However while its stock has slid by 24% over the past year, more recently it has managed a greater show of strength and the shares have soared by 45% in the last six months and notably JP Morgan Casenove is giving the firm its backing, having just reaffirmed an ‘overweight’ recommendation on the business.

Sheridan Admans, investment research manager at The Share Centre who is calling the stock a ‘hold’ says investors should acknowledge that new categories of consumer electronic devices alongside the internet should bring forward more opportunities. He adds: “Investors will look to see the progress of the ‘Pure’ division which launched some products that received good reviews from the tech community.”

Wednesday sees FTSE 100 distribution and outsourcing group Bunzl unveil its half year trading update. Prior to the report and with the share price up over 33% during the past 12 months, consensus analyst opinion currently denotes a ‘strong hold’.

As in the first quarter, the international support services company may again highlight the negative impact of foreign exchange translation asserts Bowman however from a more upbeat point-of-view, he adds that the group’s strategy to grow via acquisitions may again be underlined – it spent approximately £295m on eleven acquisitions during 2013. “Along with aiding growth, such acquisitions continue to extend the company’s international diversity – Bunzl now operates in 27 countries,” says Bowman.

Standard Chartered, which like its competitor HSBC derives a vast amount of its profits from Asia delivers its second quarter trading update to the market on Thursday. Presently the market consensus points to a ‘neutral’ recommendation on its shares, which are off by 10% over 12 months however Nomura and Investec Securities have each reaffirmed respective ‘buy’ positions in the past week.

Admans, who is calling the bank a ‘hold’, highlights that the pressure felt in emerging markets has led to revenue growth targets being cut, as well as the undertaking of a strategic review and restructuring. He says: “Operations in Africa and Hong Kong have been performing well, helping offset a decline in Singapore and South Korea. Investors will be keen to hear an update on trading conditions in these areas, the effects of FX volatility and regulatory costs. The group’s outlook, especially in Asia, will also be of importance to investors.”

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