15th January 2016
Blue Monday, officially the most depressing day of the year, is on the way, but investors can benefit from the nation’s malaise.
Blue Monday falls on the third Monday in January, which, due to festive debt, being back at work and dark mornings, is the most depressing day of the year.
However, three companies are expected to benefit from consumers resolutely cheering themselves, and investors can benefit too.
Ian Forrest, investment research analyst at The Share Centre, sets out his three share picks for Blue Monday.
TUI is the largest tourism group in the world and Blue Monday could be a good day for it as ‘UK holidaymakers finally decide they have had enough of the cold weather and take the opportunity to snap up the best deals for their summer holidays’, said Forrest.
Despite the disruption caused by the tragic events in Tunisia and the continued absence of flights to Sharm El Sheikh, full year figures reported in December beat market expectation as earnings rose 15.4% to €1,069 million. Revenues were also up 23% to €20 billion.
It is approaching a year since we changed our view on TUI from a ‘hold’ to a ‘buy’ and we continue to recommend the shares as a ‘buy’ for medium risk investors seeking a balance of income and growth,’ said Forrest.
‘This is due to the improving economic backdrop in the UK, growing success of the unique holiday offerings, long-term benefits of the merger and reducing competition in the sector.’
This independent pub and food retailer will be hoping that consumers drink away the January blues. It has 1,700 pubs across the UK which it has been developing through franchises of food and drink outlets and disposing on the drink-focused pubs.
It’s final results in November showed underlying revenues up 7% to £845.5 million with pre-tax profits rising 10% to £91.5 million. The company plans to open at least 20 new-build pubs this year.
‘Current trading for Marston’s is in line with expectations and the continued transformation of the group and the steady strengthening of the UK economy are all positives for investors,’ said Forrest.
‘Subsequently, we recommend Marston’s as a ‘buy’ for medium risk income-seeking investors. The total reliance on UK consumers does increase the risk, but the fall in the price of petrol may feed through to increased consumer spending.’
This electrical retailing behemoth is already enticing consumers to its shop on Monday through adverts for it ‘biggest ever sales’ in Curry’s and Carphone Warehouse stores.
It is one of Europe’s largest consumer electrical and mobile telecoms retailers, incorporating Dixons, Carphone Warehouse, Curry’s and PC World.
It reported a strong set of interim figures in December, as pre-tax profits in the first half rose 23% to £121 million, which was above market expectations.
‘Analysts have been raising their expectations rapidly since the merger and with the company outperforming that trend may well continue,’ said Forrest.
‘At present, we recommend Dixons Carphone as a ‘buy’ for medium risk investors seeking both growth and income due to the strong sales growth, the potential boost to retailers from the fall in the oil price and the benefits of scale provided by the merger.’