As we navigate through 2024, investors keen on maximizing their portfolios are always in search of the latest stock recommendations. This week, Finance Monthly highlights a selection of promising stocks to consider for your investment strategy. By consolidating insights from top analysts in the UK and international markets, we provide you with a valuable resource to identify key opportunities.
Source: The Telegraph
Mining giant BHP recently cut its dividend by 14%, but still offers a 5.3% yield, which stands above the FTSE 100 average of 3.7%. The company’s commitment to returning at least 50% of profits to investors underscores its income appeal. BHP is also strategically positioned to benefit from increased global demand for key resources, including copper, iron ore, and potash. The company’s robust balance sheet and dividend potential offer stability and growth prospects, providing income investors with compensation for potentially volatile payouts. Current Price: 2,152p
Source: The Times
Applied Nutrition (AN), valued at £340 million, specializes in protein shakes, energy drinks, and vitamins, serving customers in 80 countries. With pre-tax profits of £24 million on £86 million in revenue, AN shows strong financial health and is expanding in the lucrative U.S. market. Despite competitive risks and potential protein price fluctuations, Applied Nutrition’s solid margins and growth prospects make it a promising investment. Current Price: 142p
Source: This is Money
Pinewood Technologies provides software for automotive dealerships, supporting car sales, repairs, and service management. Recently securing a contract with Marshall Motor Group, one of the UK’s largest car retailers, Pinewood is positioned for continued growth domestically and internationally. It also plans to introduce new products, including AI chatbots, to enhance customer experience. Analysts predict significant profit growth, with estimates suggesting a 61% increase to £12.6 million by 2025, reaching £17 million the following year. Current Price: 337p
Source: Shares
Although Games Workshop’s shares have been relatively flat, the outlook remains optimistic. The fantasy miniatures company is expected to expand significantly over the coming decade, fueled by robust free cash flow and growing sales. With recent upward earnings revisions and potential revenue from a Warhammer TV series with Amazon, Games Workshop’s intellectual property offers substantial growth potential. The series, starring Henry Cavill, could generate $10 million in royalties, expanding brand visibility and setting the stage for future entertainment projects. Current Price: 11,990p
Source: Investors’ Chronicle
C&C Group saw a 29% increase in interim operating profits to €40.3 million, despite a slight drop in net sales amid tough economic conditions. The Irish beverage company hopes that regaining control of its distribution from Budweiser Brewing Group will support the growth of its flagship cider brand, Magners. With strong retention levels in distribution and anticipated holiday demand, C&C Group’s performance could improve further. Current Price: 148p
Boeing (LON: CCR) Source: The Times
Boeing has struggled to turn a profit since 2018, facing quality and innovation setbacks, scandals, and production delays. The planemaker’s short-term focus on profit, paired with insufficient plane sales, has raised concerns about covering fixed costs. Boeing’s debt position and reliance on recent equity raises may keep cash flow intact, but substantial production improvements are needed to stay competitive with Airbus. “With so much uncertainty,” Boeing currently “looks best avoided.” Current Price: $154
ProCook (LON: PROC) Source: Shares
Following a challenging IPO in 2021, kitchenware brand ProCook is showing signs of recovery. With five consecutive quarters of growth, the company is enhancing its retail footprint and preparing for holiday sales. ProCook’s new leadership aims for ambitious growth targets, including expanding to 100 UK shops, achieving £100 million in revenue, and a 10% operating margin. Analysts project rising profits, with a potential maiden dividend in sight, making ProCook “too cheap” to overlook. Current Price: 29p
Currys (LON: CURY) Source: The Telegraph
With UK wages growing faster than inflation, consumers are in a stronger position to purchase electronics from Currys. The retailer’s market value has surged 87% this year, though it faces challenges in the Nordics. Despite a 28% decline since 2021, the company’s low valuation and earnings growth potential mean that, while risky, the stock could see improvement with better consumer conditions. Hold Rating at 84p
Tate & Lyle (LON: TATE) Source: Investors’ Chronicle
Since selling its sugar division in 2011, Tate & Lyle has focused on ingredient solutions. The recent acquisition of CP Kelco, valued at $1.8 billion, has generated mixed reactions, but profit growth and a low stock valuation relative to competitors suggest potential. Rumored as a possible takeover target for Advent International, Tate’s small size may deter a premium offer. Hold Rating at 762p
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Macquarie Group Ltd. Reports Disappointing Profit Decline Amid Reduced Market Volatility
Macquarie Group Ltd. has announced a decline in profit that failed to meet analyst expectations, primarily due to decreased volatility affecting its core commodities and global markets division. Following this news, the company’s stock opened down 4.3%.
For the six-month period ending September 30, Macquarie reported net income of A$1.61 billion (approximately $1.06 billion), up from A$1.42 billion during the same period last year. However, this figure fell short of the A$1.74 billion average forecast from four analysts surveyed by Bloomberg. Although the results were partially bolstered by sales from green-energy investments within its asset management sector, they were insufficient to counterbalance the downturn in advisory services from its investment-banking division, Macquarie Capital.
Analysts from UBS, led by John Storey, highlighted that the disappointing performance was largely attributed to weaker revenues and profits in the Commodities and Global Markets (CGM) segment, particularly concerning commodity risk management. The outlook for the company remains cautious, with shares pulling back from a record high achieved just last week.
Over the past year, investors have tempered their profit expectations for Macquarie, even as Chief Executive Officer Shemara Wikramanayake expressed confidence that business conditions will gradually improve as energy trading expands and deal-making begins to recover, mirroring trends seen in U.S. banks. In contrast, major Wall Street banks have reported robust earnings for the quarter ending in September, largely driven by heightened activity in market operations and increased fees from investment banking.
Macquarie has been losing the favorable conditions that once allowed it to achieve record profits across several key divisions. The company previously benefited from unique disruptions in the energy market, which significantly enhanced its commodities trading operations, along with a surge in deal-making that bolstered its investment banking services. However, recent gains in its commodities trading division are starting to wane as clients reduce their reliance on the bank for hedging due to a lack of volatility in global energy markets. Nonetheless, the firm’s proprietary energy trading operations in the United States have demonstrated strong performance.
In response to the current situation, Macquarie's board has approved a 12-month extension of its previously announced buyback program, which amounts to up to A$2 billion. As of 10:08 a.m. in Sydney, shares have experienced a decline of 4.3%, resulting in an overall year-to-date increase of 21%.
The upcoming months will be crucial for Macquarie as it navigates through these challenging market conditions and seeks to regain its footing in the competitive financial landscape.
European Markets Plunge in October: Inflation Surges, UK Budget Shakes Investors, and Bank Stocks Soar Amid Turmoil!
European stock markets wrapped up October with their steepest monthly fall in over a year, as investors weighed corporate earnings, inflation data, and the UK's recent budget announcement. The pan-European Stoxx 600 index closed down by 1.2%, with every sector and major exchange posting losses. This brings the index's total decline for October to 3.4%, the largest drop since October 2023, according to data from LSEG.
Inflation took center stage as preliminary figures indicated that eurozone inflation rose to 2% in October, surpassing both the 1.9% forecasted by analysts surveyed by Reuters and September's rate of 1.7%. This increase is likely to influence the European Central Bank’s (ECB) approach to interest rates. Economists now suggest the possibility of a 50 basis-point cut in December is less likely, with a smaller 25 basis-point reduction being more plausible.
These figures followed Wednesday’s economic report, which revealed the eurozone economy expanded by 0.4% in the third quarter, exceeding the predicted 0.2% growth rate. Such resilience may strengthen the ECB’s resolve in managing interest rates cautiously, even as inflation shows signs of modest acceleration.
In the UK, housebuilders were particularly affected as government bond yields surged following Wednesday's budget announcement, which outlined substantial tax increases and additional borrowing. This fiscal approach sparked concerns among traders about potential inflationary effects, which could slow the Bank of England’s rate-cutting momentum. Stifel equity researcher Charlie Campbell noted to CNBC that the budget provided limited reassurance for housebuilders, who remain sensitive to interest rate adjustments. However, he added that the sector’s prospects may improve as more third-quarter earnings results are released and as the Labour government outlines housing policies intended to support the sector.
Meanwhile, Societe Generale shares surged by 11.3% after the bank reported a notable 10.5% year-on-year revenue growth in the third quarter. The increase also follows a shakeup in leadership, including the appointment of a new chief financial officer, signaling potential strategic shifts that investors found encouraging.
Across the Atlantic, U.S. markets faced declines for a second consecutive day, impacted by disappointing earnings reports from tech giants. Investors also processed recent economic data revealing that the personal consumption expenditure (PCE) price index—the Federal Reserve's preferred inflation gauge—rose by 2.1% in September, in line with expectations. This keeps inflation firmly on the Fed’s radar as it considers rate policy.
In the Asia-Pacific region, markets also softened as investors reacted to the Bank of Japan's decision to maintain its current interest rate strategy. Additionally, new business activity data from China added to the region's cautious sentiment, reflecting a global market increasingly vigilant about inflationary pressures and the impact of shifting central bank policies.
As European markets closed out October on a downbeat note, global investors continue to monitor inflation trends, corporate earnings, and central bank moves across major economies. The coming weeks may bring further clarity as third-quarter earnings reports roll in and central banks meet to set policy agendas for the year ahead.
With the 10th anniversary of the Lehman Brothers’ shocking and unprecedented bankruptcy this month, Katina Hristova looks back at the impact the collapse has had and the things that have changed over the last decade.
Saturday 15 September 2018 marked ten years since the US investment bank Lehman Brothers collapsed, sending shockwaves across the financial world, prompting a fall in the Dow Jones and FTSE 100 of 4% and sending global markets into meltdown. It still ranks as the largest bankruptcy in US history. Economists compare the stock market crash to the dotcom bubble and the shock of Black Friday 1987. The fall of Lehman Brothers was a pivotal moment in the global financial crisis that followed. And even though it’s been an entire decade since that dark day when it looked like the whole financial system was at risk, the aftershocks of the financial crisis of 2008 are still rumbling ten years later - economic activity in most of the 24 countries that ended up falling victim to banking crises has still not returned to trend. The 10th anniversary of the Wall Street titan’s collapse provides us with an opportunity to summarise the response to the crisis over the past decade and delve into what has changed and what still needs to.
As we all remember, Lehman Brothers’ fall triggered a broader run on the financial system, leading to a systematic crisis. A study from the Federal Reserve Bank of San Francisco has estimated that the average American will lose $70,000 in lifetime income due to the crisis. Christine Lagarde writes on the IMF blog that to this day, governments continue to ‘feel the pinch’, as public debt in advanced economies has risen by more than 30 percentage points of GDP – ‘partly due to economic weakness, partly due to efforts to stimulate the economy, and partly due to bailing out failing banks’.
Afraid of the increase in systemic risk, policymakers responded to the crisis through quantitative easing and lowering interest rates. On the one hand, quantitative easing’s impact has seen an increase in asset prices, which has ultimately resulted in the continuation of the old adage, the rich get richer and the poor get poorer. The result of Lehman’s shocking failure was the establishment of a pattern of bailouts for the wealthy propped up by austerity for the masses, leading to socio-economic upheavals on a scale not seen for decades. As Ghulam Sorwar, Professor in Finance at the University of Salford Business School points out, growth has been modest and salaries have not kept with inflation, so put simply, despite almost full employment, the majority of us, the ordinary people, are worse off ten years after the fall of Lehman Brothers.
Lowering interest rates on loans on the other hand meant that borrowing money became cheaper for both individuals and nations, with Argentina and Turkey’s struggles being the brightest examples of this move’s consequences. Turkey’s Lira has recently collapsed by almost 50%, which has resulted in currency outflow and a number of cancelled projects, whilst Argentina keeps returning for more and more loans from IMF.
Discussing the things that we still struggle with, Christine Lagarde continues: “Too many banks, especially in Europe, remain weak. Bank capital should probably go up further. 'Too-big-to-fail' remains a problem as banks grow in size and complexity. There has still not been enough progress on how to resolve failing banks, especially across borders. A lot of the murkier activities are moving toward the shadow banking sector. On top of this, continued financial innovation—including from high frequency trading and FinTech—adds to financial stability challenges. In addition, and perhaps most worryingly of all, policymakers are facing substantial pressure from industry to roll back post-crisis regulations.”
The Keynesian renaissance following that fateful September day, often credited for stabilising a fractured global economy on its knees, appears to have slowly ebbed away leaving a financial system that remains vulnerable: an entrenched battalion shoring up its position, waiting for the same directional waves of attack from a dormant enemy, all the while ignoring the movements on its flanks.
If you look more closely, the regulations that politicians and regulators have been working on since the crash are missing one important lesson that Lehman Brothers’ fall and the financial crisis should have taught us. Coming up with 50,000 new regulations to strengthen the financial services market and make banks safer is great, however, it seems that policymakers are still too consumed by the previous crash that they’re not doing anything to prepare for softening the blow of a potential new one. They have been spending a lot of time dealing with higher bank capital requirements instead of looking into protecting the financial services sector from the failure of an individual bank. Banks and businesses will always fail – this is how capitalism works and no one knows if there’ll come a time when we’ll manage to resolve this. Thus, we need to ensure that when another bank collapses, we’ll be more prepared for it. As Mark Littlewood, Director General of the Institute of Economic Affairs, suggests: “policymakers need to be putting in place a regulatory environment that means that when these inevitable bank failures occur, they can fail safely”.
In the future, we may witness the bankruptcy of another major financial institution, we may even witness another financial crisis – perhaps in a different form. However, we need to take as much as we can from Lehman Brothers’ collapse and not limit our actions to coming up with tens of thousands of new regulations targeted at the same problem. We shouldn’t allow for a single bank’s failure to lead us into another global crisis ever again.
