Category Archives: The In & Out

Naked Greed!

Welcome to Naked Greed, the column that will not only let you have your cake, but also let you eat it!

Be unashamedly greedy because you just know it’s a no brainer! This regular column will celebrate the ludicrously undervalued, offering silly yields with great capital growth potential: Well managed companies with a raison d’être and not afraid of the dirty words profit and dividend; companies that don’t feature on the catwalk and hence can’t fall off it; companies that would have been gobbled up long ago had it not been for the crunch and hence provide the perfect fodder for future M&A. In a nutshell: The Ocado antichrists!

Bored with BP, fed up with Fresnillo, tired of Tullow? Then you should consider the ones that got away with it! However, the golden rule applies: Buy on weak sentiment, buy when the crisis hits and buy when there’s blood in the street! Right now the markets are still melting up which makes it particularly tricky… however, even now there are a few great buys:

No.1 on Pinkers’s list is Smiths News (Support Services). On 22 April 2014 it will become Connect Group PLC. The Group Structure will include three market-focused divisions: Connect News & Media; Connect Books and Connect Education & Care. This name change is overdue, reflecting the successfully implemented strategy to diversify away from magazine distribution towards the digital age. The s/p has come down substantially from a high of 248p to 153p with a current P/E of 8.9 and a yield of 6.1%. Pinkers agrees with Martin Waller of Times Tempus who sees no good reason for the s/p fall. This is an exceptionally well-managed company with a great future and almost certainly a potential candidate for M&A.

No.2 on the list is Catlin Group (Insurance). Punished for not dishing out a special divi after bumper results, the shares now trade at a P/E of 5.4 and yield 5.1%. Current price 533p and better capital growth potential than Amlin &Co. Pinkers likes companies that invest rather than keeping investors happy with sweeties.

Naked Greed will be back, soon… with picks from Construction, Food and Healthcare… a bientôt!

Snap up Sainsbury’s!

If you believe the market’s reaction to Morrisons results, the big four are well and truly finished. Give it a couple of weeks and the whole of the British population will be shopping exclusively at Aldi and Waitrose. The middle ground is dead. Pause for thought… . Whilst it is undoubtedly true that the retail environment in the grocery sector has changed dramatically over the last 5 years, it is rather premature to write off the dinosaurs altogether.

Tesco is clearly in trouble and it will probably take years to turn round this supertanker. Facing a battle on both the national and international front, this will be no mean feat. Furthermore, it appears the British have simply fallen out of love with Tesco. It’s just out of fashion. Pinkers suggest they hire Saatchi & Co to overhaul the brand… perhaps “Tesco is working…again”?

As for Morrisons, this really is a disaster. Having abandoned their core customer base and completely ignored the online and convenience shopping revolution, there is little hope. As a supermarket it is redundant. What is left is a pure property play – a risky one.

Things are looking decidedly different for Sainsbury’s, the middle classes favourite grocer. Despite being the only one of the big four that has managed to maintain market share, the s/p has been dragged down by the sector’s overall negative sentiment. Today’s dramatic 8% drop takes it down to a P/E of just under 10 with a juicy 5% yield.  Furthermore, The price is firmly underpinned by continued takeover speculation and with Quatar owning 26% and the family shareholding now immaterial, there will inevitably some kind of new ‘arrangement’ in the not so distant future. At this level, Sainsbury’s is a firm buy.