8th October 2014
A leading stock broker has compiled a list of what it is calling its winter stock picks. Ian Forrest, investment research analyst at The Share Centre, has compiled a list of the five stocks that should benefit from the winter months.
“As winter approaches, clothing retailers such as Next have their new season collections displayed and ready to sell. However, due to Britain’s recent Indian summer there is slower demand for winter warmers such as jumpers, coats, gloves and scarves. An unusually mild September took its toll on the group’s sales, however investors should note that it hopes to recover some of the lost sales when the weather eventually turns.
“Despite this, Next has seen its strongest sales growth for years in the first half and its stores contributed more to growth than the mail order directory business for the first time in several years. Sales are benefitting from less discounting and an improving UK economy. Next expects to raise its regular dividends by 17% this year, and has the capacity to make further share buybacks if it feels the price is right.”
“Reality shows such as the X Factor and I’m a Celebrity… Get Me Out of Here, alongside dramas such as Downton Abbey and Grantchester dominate ITV’s winter schedule this year. With more people likely to avoid the cold and dark nights by opting for a night in front of the television, ITV could benefit.
“Investors should be encouraged by recent results as the company demonstrates it is continuing to move in the right direction. Analysts are encouraged by the improvement at its Studios business, which continues to see good growth helped by international demand for shows including Downton Abbey and Mr Selfridge. With the advertising market also showing signs of improvement, ITV is well placed and the group plan to generate half its revenue from sources other than traditional adverts by 2015.”
“The milder than usual winter of last year affected Centrica’s profits as some customers kept the heating turned down. The group, which is Britain’s largest supplier of gas and owner of British Gas, should benefit if cooler climates reappear causing an increased demand for gas to heat homes.
“The group continues to improve its own supply lines, which will help with regard to movements in the price of gas. As the winter nights draw in and it gets colder and darker earlier, Centrica will hope its customers choose to stay in and use its gas to keep warm.”
“The New Year is among the busiest of periods for companies such as Tui Travel as UK travellers look to escape the cold weather and book their summer holidays. For the coming winter, TUI has sold 5% more holidays to British customers than the same time last year with strong demand for holidays in places such as Mexico and Jamaica. Additionally, sales for summer next year are already up 11%. Despite this, the company warned it expects a negative impact on its full-year earnings due to foreign exchange movements, particularly the fall of the euro against the pound.
“Management recently reported a healthy rise in operating profits in the UK and Germany and a strong start to UK trading for next year’s summer holidays. The improving economic backdrop in the UK, rising profit margins and the success of TUI’s unique holiday offerings are all positive factors investors should recognise.”
Royal Dutch Shell
“UK homes and offices will need more natural gas for heating and power this winter, as is typical for the winter season and Royal Dutch Shell will look to benefit from this. In recent years, the oil and gas sector has benefitted from energy prices remaining at elevated levels. The price of oil has dipped of late, however it looks like it is set to rise which is not great news for the individual consumer but great news for the company.
“Royal Dutch Shell has seen its share price fall over the last three months, which is disappointing given it hit its Q2 profit expectations. Recent trading statements have been positive, showing increased production volumes and successful exploration programs, and the share price has responded positively.”