7th May 2014
The Share Centre has tipped five stocks for investors to consider should the sun shine or at least if consumer confidence keeps growing this summer.
Graham Spooner, investment research analyst, outlines them below.
With a supposed warm summertime rapidly approaching, family days out during the summer months are beginning to be pencilled into diaries across the country. As the operator of 99 attractions, 25 of which based in the UK, Merlin Entertainments are preparing for another demanding year. Investors will be keen to see if the business continues its growth pattern, which could be helped by soring temperatures, after 2013 saw another year of double digit growth and an increase of £32m in operating profit. Merlin Entertainments certainly looks like it could benefit from the possible sunny weather particularly during the school holiday period.
Investors will be reassured that Marston’s started the year well, reporting results in line with management expectations over the Christmas period, despite the bad weather conditions. The company operates 2150 pubs in the UK and will aim to gain more capital by enticing visits to their outdoor/garden establishments over the summer months. The business management’s strategy, known as the F Plan continues to deliver results. Investors will hope to see that if the early sign of positive consumer spending alongside the longer warmer days has an impact on the business as it is reliant on the UK consumer to provide 99% of its revenue.
The retail sector sales result were up in 2013 and is showing signs that this trend is continuing. As the UK’s leading retailer of automotive, cycling and leisure products, Halfords could take prime opportunity of the summer period. Sporting events such as the Tour de France, which is coming to the UK this year, and the company’s sponsorship of the Deloitte Ride across Britain could encourage more bike users to explore the British countryside. According to the company, the UK cycling market has been growing by 5% per annum and this long term trend is due to such events causing a significant and sustained interest in cycling. Can the increasing popularity of Chris Froome and Bradley Wiggins continue to boost the cycling industry’s profile?
The beverages sector could see sales soar as the public attempt to quench their thirst over hot periods. Nichols, a soft drinks operations company is, under the name of Cabana, the UK’s largest independent supplier of dispensed soft drinks. As a result of carbonate volumes recovering and the welcome boost of the better summer weather, the second half of 2013 saw sales grow by 4% year on year for Nichols. If the sun does shine, investors will be keen to see if this trend continues and as a result sales continue to grow.
Kingfisher, a supplier of DIY products and services, is also impacted by the weather and more importantly, the gradual recovery from the recession. The potential hot summer could see sales of garden furniture, watering equipment and fencing, paving and decking materials increase. Additionally, as the government starts to focus on strategies to support the demanding housing market, the need for DIY products and services could coincide with this. The company’s European operations are acting as a drag, so let’s hope that the area of high pressure also ventures across the channel.