GG now spends rainy days trading equities and currencies. He likes to use a combination of technical analysis and news flow to make trading decisions.
Wolseley and Land Securities
Welcome to the latest instalment of the ‘Trades with Legs’ blog, in which I will be highlighting some stocks that will ‘go the distance’ better than Marion Jones and without the need for a ‘little extra help’ in your coffee!
First up for next week are a couple of stocks whose shares have been clobbered over the past year. However, both have been showing early signs of stabilising in recent weeks.
Wolseley is one of the world’s largest builders’ merchants, with extensive interests in the US, the UK and Europe. Understandably given the prospects for the housing market in both the US and UK, the shares have halved over the past year. An interim trading update is expected on Monday. In November, the shares touched rock-bottom after a disappointing trading update. They have since rallied as the prospect of lower interest rates and a potential recovery in profits has enticed investors back in.
Another share with similar performance is Land Securities, one of the UK’s largest property companies. Land is expected to put out a Q3 statement on Tuesday. The UK commercial property market had a torrid 2007, with prices thought to have fallen by about 10% overall, but by 5% in December alone. However increases in rental income of 5% have cushioned the blow a little. Again, investors are ‘bottom-fishing’ (Be careful when Googling that!) thinking that possibly the worst might have passed. Last week it was disclosed that the Government of Singapore had built up a stake of 3% in British Land, another large property company.
January 21st, 2008 at 7:23 pm
Blimey-what a day! Indices shedding points faster than UK Government departments lose laptops!
And probably not the best day for Wolseley to update the market on just how bad the US housing market is either. Although after a sharp inital markdown of over 10%, the shares rallied to be ‘only’ down 3.7% at the close.
The trading staement wasn’t great, suggesting that what had been a purely US issue was now beginning to impact upon European markets as uncertainty increased. Trading in the UK was OK, although Irish operations suffered as housing starts declined by 50%. Looks to me as if there might be some more pain to come on numbers, although the Group is well managed. Will be one of the first stocks to benefit from any glimmer of recovery in the US housing market.
January 22nd, 2008 at 5:30 pm
Well I’ve had a bit of a busy day what with the FOMC and all that.
Anyhoo, Lands produced a decent enough trading update, although the news itself was probably upstaged by the Fed rate cut later. Property stocks are one of the first places look to stuff money when rates get cut, usually along with the housebuilders. On my screen, they look like they closed up 119, or almost 8%.
Hope some of you managed to get on board-and once I’ve seen what analysts made of it all I’ll give another heads-up.