I paid c480p a month or two ago but luckily bought twice as many c425p early on Monday and am pleased to see some recovery now to 447p, at which level they still look undervalued.
In this market, any disappointing news gets a severe price response and this was no exception so its now an opportunity to get a 7% yield in a well run company with maybe boring or moderately poor short term prospects. Even so, I reckon its by no means certain the dividend will be cut but probably in the price if that happens.
When you talk generalities about the FTSE, it sounds like brilliant value. But look at the specifics of each company and you see lots of overgeared businesses. However there are a good number of lowly geared, high yielding, albeit potentially cyclical companies.
In my view we are seeing a repeat of the tech bubble; buyers are steering well clear of boring, lower growth, value businesses. Woodford was right last time and may well be right again.
I think that companies like LLOY, AV, CRST, NRR are stonking good value. Ive filled my boots and intend to enjoy the divis. Admittedly I am now 63 and therefore as keen on income as growth. I also hold CLIG.
Im getting my growth kick from a smaller number of RQIH and BPM.
My performance to date is suffering from my value bias; Im down 1% on my personal holdings (I spend the divis) and up 1% on my pension where I keep the divis and hold 40% of cash awaiting a rainy day.
It remains to be seen if my strategy is sound, but my value bias at least has the virtue of appearing to be much better value than any bond, gilt or annuity.
The FTSE is currently on a forward dy of 5.2% net of basic tax, which should compound at say 8% pa (the retained earnings return on equity) & reasonable inflation protection. I suspect this is due to the brexit fear. This compares v favourably, to put it mildly, with medium term gilts yielding 1.4% gross which can only compound at ca 1% pa & no inflation protection. Either the economy implodes or post a reasonable brexit the FTSE rises somewhere +30%/+50%. This would return the dy to a reasonable average & the index to a historic level in line with previous ratios to the Dow/S&P. We shall see.
CRST is also my pick of the housebuilders. The update is sound but tinged with realistic caution, given where we might be in the housing market cycle. I do think there has been an overreaction to the results here and the sp is being unjustly punished but CRST seems cheap to me and is a solid business offering a stonking yield.
I hold a fair chunk of CRST and I'm sat on a sizeable paper(electronic) profit and will continue to hold. I have scope for one more (final) tranche but will see how things pan out with the market over the coming months...
Speaking generally (not specifically about CRST) my gut feeling is that we're being primed for bigger falls across the markets - there have been too many OTT reactions to OKish results just lately. The next few months might present some wonderful buying opportunities (or might not!)
Ridiculous over-reaction to an update which is fundamentally positive but rightly cautions about a flat market and price pressure, so H1s will be at the bottom end of forecast, dividend not in danger. That is not a profit warning is it! A 12% slump because ... a blight on all shares beginning with C.
Added a good chunk just now at 440p, there is no sensible reason on earth why a growing profitable business with fair outlook should be trading on p/e < 8. CRST remains my pick of all the builders, the bad news (and some) already priced.
Read the TW capital day IMS & especially the presentation. In short TW are planning to reduce the short tem l/b cover from ca 5.1 yrs down to ca 4 yrs. This a/ dramatically raises ROCE (no surprise Sherlock this has always been the ultimate goal) making them wildly cash generative thus b/ enabling TW to raise their DY ca +20% yoy (which they have committed to).
All the builders are variations on a theme. CRN have ca 5.5 yrs short term l/b cover. A similar move would enable them to raise DY to a level at current price equating to a nigh on 10% yield!
Further TW are planning to migrate the sl/b to upweight large sites / London & SE. Er ............... why would they be doing that if the top end market is perma shut?!
This looks to be largely one off issues in context of a solid market (see the TW IMS y'day & today's Times review) Consequently the 2020 t/o target £1.4bn scaled down marginally (-5%) to ca £1.33bn. Achieving whats required in unit sales (good), asps flat (pretty much what I expected), but margin down. Margin essentially reduced as a the housing market becomes bifurcated sub asp £600k (the h2b threshold) all fine, but above this transactions increasingly arent happening (lack of confidence + the SD etc hit).
For CRN the asp / margin issue arises due to a/ exiting central London; b/ rolling out into central & the midlands (thus diluting asp); c/ the upper market being stalled necessitating increased use of incentives to shift units (though interestingly pure price points are solid); d/some increased price competition within this segment & areas.
The above looks largely one off step change/reduction. But it has a major impact. Looking at the land GDV end A18 £5960m, this breaks down as follows. By units ca 90% sub £600k & 3% plus £1m by asp. By £ ca 70% sub £600k & ca 25% plus £1m by asp.
The prospective dy is almost 9%. So I will hold & suck it up! Interestingly they're starting to think about bb's. With a decade+ in the l/b they don't need to ramp this up & so will have plenty spare cash. At some point the upper market reopens. Then its game on as ever I just dont know when!
There's only ever one reason for buying, but can be many reasons for selling. Dirs have legally v ltd time windows when they are allowed to sell. Start Apr he owned ca 3.8m sh & so has sold ca 6.5% of his total holding.
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