Mindful Money’s Monday share watch: Rio Tinto, Anglo American, Land Securities & Sports Direct

14th July 2014


Investors will be hoping to hear some positive news from Rio Tinto on production and commodity price revenues when it updates with its second quarter results this Wednesday.

With the global economic backdrop showing marked improvement, at least in the developed world over the past year, shareholders will also be hoping that the supply and demand imbalance in the natural resources arena reverses soon.

The shares have enjoyed a 13% rise in the past year and ahead of the update, the broker consensus has the stock rated a ‘buy’ with analysts at Credit Suisse, Citigroup and UBS having all just reiterated upbeat recommendations.

Sheridan Admans, investment research manager at stockbroker The Share Centre says: “Investors will also want updates from Rio Tinto on its various large scale projects around the world.

“Investors will be pleased to see the shares of companies in the oil and gas sector holding up despite the ongoing weakness. We currently list Rio Tinto as a ‘buy’.”

Anglo American follows Rio’s update with its own set of second quarter numbers on Thursday.

The mining giant which produces a whole range of metals and natural resources including gold, platinum and diamonds has enjoyed an 18% share price rise in the last six months alone.

In its second quarter production and sales update, investors will be hoping to see a continuation of the group’s recent momentum.

Echoing the wider broker sentiment, Admans rates the shares a ‘hold’. He says: “They will also be expecting to see the investments made into expansions of existing mines, contribute to production increases. This is a company that has been dogged by industrial action in South Africa and commentary surrounding these issues will be welcome.”

Thursday sees Land Securities deliver its first quarter trading update. One of the UK’s largest property companies, its shares are up just 5% over the past year but investors are likely to hear about the buoyant conditions being seen within its London commercial property business.

Keith Bowman Hargreaves Lansdown Stockbrookers notes that with the company having begun its new property development programme back in the near aftermath of the financial crisis in 2010, the group’s now somewhat more cautious approach towards new development could again be underlined, with pre-lets now a prerequisite.

He says: “An update with regards to the external solution to resolve the solar glare issue impacting its 20 Fenchurch Street development could also feature. Prior to the announcement, analyst opinion currently points towards a ‘hold’.”

An encouraging fourth quarter trading update has left investors expecting Sports Direct International to at least achieve its full year internal underlying target of £310m.

With the stock up 23% in the past 12 months, and the full results out on Thursday, investors will be keen to see how the Lillywhites owner is progressing in the development of its higher margin premium lifestyle operation. In line with the market consensus, Admans is calling the stock a ‘buy’. He says: “They will also want to hear an update of its overseas expansion plans and how the growth of its online proposition is fairing.”

Nicla Di Palma, equity analyst at Brewin Dolphin expects strong revenue growth, with rapid increases in online sales and margin expansion in the UK.

Di Palma says: “The outlook will be for further growth in our view, although it might slow down from the 24% level posted in the first half of this year.”

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