Mindful Money’s Monday share tips: Whitbread, WPP, BHP & HRG

21st October 2013

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BHP Billiton, Whitbread, WPP and Unilever are among those updating the market this week. We round up what the brokers are recommending ahead of their reports writes Philip Scott.

Premier Inn and Costa Coffee owner Whitbread reports its half-year results on Tuesday.

In wake of speculation regarding a possible demerger of its Costa Coffee business, accompanying management comment with regards to the division is likely to be closely scrutinised says Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

He says: “The group’s underperforming restaurant business remains under the spotlight – like-for-like sales declined by 0.2% in the second quarter – whilst rent costs for the company’s Premium Inn division may also provide a point of interest. Pre-tax profit for the period is expected to increase by just under 10% to £212.5m.“

Over the past year, its shares have surged by 42% and the past six months have seen the group enjoy a 39% rise.

Currently brokers are split on their opinion of the firm. For his part Sheridan Admans, investment research manager at The Share Centre is calling the stock a ‘hold’, while analyst opinion according to Bowman is continuing to denote a ‘buy’, given the group’s expansion plans.

Also reporting on Tuesday is mining group BHP Billiton. Commodity prices have not changed too much in the third quarter compared to the second, so investors should expect production numbers to be the driver for the BHP Billiton’s revenue numbers says Admans. The firm’s stock has not endured any big swings recently, where the past six and three months have witnessed the company’s stock rise by 5% and fall by 1% respectively.

Admans adds: “The macro economic uncertainties in the US and China may have had a restraining impact. Investors will lookout for the progress on current expansion projects, along with any potential write-downs. We currently list BHP Billiton as a ‘buy’.”

Wednesday sees the FTSE 250 listed Home Retail Group report its half-year results. The results come on the back of improving sales momentum for both its Argos and Homebase brands. Same store sales grew by 2.7% and 11% respectively in the second quarter, up from 1.9% and 1.4% in the first.

Its shares have enjoyed a 69% rise over the past year, albeit from a low base and during the last three months the stock has jumped 16%.

Bowman says: “Any update with regards to the trialing of a collection service for around 50 selected eBay merchants at some 150 Argos stores will also be closely watched for. Prior to the release, and with analysts still sceptical regarding the Argos transformation plan, consensus opinion currently points towards a ‘weak hold’.”

In British American Tobacco’s interim management statement on Wednesday, investors will be eager to learn if the group can continue to grow profits on higher prices to combat falling volume sales.

Admans, currently lists British American Tobacco as a ‘hold’. He adds: “They will also be looking for some insight on its alternative nicotine products and the impact they could have tackling the UK’s stricter Government constraints. It will also be interesting to see if the new products have the capability of helping to support falling volume sales in the UK.”

A trading update from advertising and public relations giant WPP on Thursday will be closely watched. All-in-all, the past year have seen its shares jump 51% and given that recent updates have raised expectations for organic growth, investors will be hoping that there is no change to that trend. Admans, who rates it a ‘hold’, says: “Other areas to concentrate on will be the health of emerging markets, along with the growing benefits from digital media opportunities. With some big events set for 2014 there is every chance of growing confidence in the group’s outlook.”

Also delivering a trading statement is consumer goods group, Unilever, where the focus is undoubtedly going to be on the group’s progress across emerging marketsA ‘buy’ for Admans, he says: “We expect to see growth in its European operations to remain challenged as unemployment continues to rise and consumer sentiment remains soft. We also expect investors to see competition remain tough in the US.”

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