Stocks which may blossom in the Summer

Helal Miah, investment research analyst at The Share Centre, outlines five companies whose stocks could benefit from the upcoming summer months.

Stocks which may blossom in the Summer

Marston’s

Independent brewing and pub retailing company Marston’s is likely to benefit from those people fancying a tipple in a pub garden after work or at the weekend when the sun shines.

The company operates five breweries and owns an estate of 1,700 managed, leased and tenanted pubs across the UK, so there’s no denying it has the establishments necessary to attract some good business. Indeed, interested investors should appreciate the group has plans to expand, with 23 new built pubs and 8 accommodation lodges planned for this year alone.

The company has been performing well of late, with interim results in May showing increases in underlying revenues and pre-tax profits. Improving UK employment levels and a resilient economy are supportive, as are low interest rates which help keep mortgage rates low and boost disposable income levels. The group’s continued expansion and healthy dividends are positive for investors and as a result, we recommend Marston’s as a ‘buy’ for medium risk, income-seeking investors.

Unilever

Unilever manufactures a wide range of consumer goods, including food, detergents, fragrances, home and personal care products. Its 400 brands include many well-known favourites such as Dove, Flora, Knorr, PG Tips and Ben & Jerry’s. The group describes itself as ‘the world’s largest ice cream company’ and so it could benefit as sun worshippers reach for their freezers to grab a sweet treat to cool down.

The fact that the group has recently stated it is introducing 16 new frozen treats in 2017 across five of its brands with new offerings including it’s first-ever non-dairy line, made with almond milk, will only help its proposition. The weak pound has helped the group beat expectations of late and there is certainly encouraging signs in many of its key markets. The large and diverse range of well-known global brands provides a solid foundation for sales and earnings growth and when you add in the healthy dividend and the fact that it continues to see the benefits of its cost-cutting measures, we believe this could be a good opportunity for lower risk investors.

Restaurant Group

With school nearly out for summer, it is likely that parents and friends are beginning to make plans, including dinner dates and trips to the cinema, to keep everybody entertained. The positioning of Restaurant Group’s 488 restaurants has been key to its success, as they are often located in out of town, retail and entertainment complexes, meaning they are in prime position to benefit from such planned activities over the summer.

Whilst figures coming from the group have not been inspiring recently, the strategic review on the business has been completed and investors will be hoping that this will lead to a turnaround of its fortunes. The fall in the share price may attract the attention of a private equity bid but after the latest update we would suggest Restaurant Group would be suitable as a higher risk buy for contrarian investors only, who either see its strong brands as a tempting proposition to a predator or enable management to address the recent problems.

New River Retail

AIM listed NewRiver Retail is a property development company focussing on UK retailing, especially food and shops offering value to consumers. The company describes itself as one of the UK’s largest shopping centre owner/managers with its businesses comprising of 33 UK-wide shopping centres, 22 retail warehouses, 15 high street assets as well as a portfolio of 344 pubs. The group will therefore be hoping to attract as many shoppers looking for their holiday essentials as possible into its institutions over one of its busiest operating periods.

The company has a dynamic and innovative management with a focus on developing small retail sites, especially the growing convenience store sector. Its strategy is usually to buy existing retail sites, refurbish and then look to raise rental levels. The focus on smaller sites spread across the UK, the willingness to be innovative and the payment of quarterly dividends are all positive factors for income seekers, although concentrating purely on retail property raises the risk level to high for interested investors.

Carnival

The popularity of cruises continues to increase as summer holidaymakers become more exploratory. As a result the largest cruise company in the world Carnival, whose fleet includes a total of 100 ships and 212,000 berths, could benefit.

First quarter results showed that the strong trading of last year has carried into the new year with earnings per share and net revenue yields both ahead of expectations. Moreover, the group continues to see a sustained improvement in booking trends with yield growth expected to continue through 2017.

Interested investors should appreciate that despite the fact that there has been a significant impact from higher fuel costs and adverse currency moves, guidance for the full year has been slightly raised. Combine this with the relative good value represented by the strong earnings growth, good momentum in prices and the potential for growth in Asia, especially in China, we recommend the shares as a ‘buy’ for medium risk investors.

 

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest. 

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