4 Shares That Are Beating the Recession
LONDON -- Perhaps company bosses should have a go at running the country's finances. That's certainly the conclusion you might come to if you compare some recent U.K. company results with our government's own accounts.
As I wrote recently, many U.K. companies are thriving in the current economic crisis, delivering rising revenues, profits, and dividends. At the same time, they are on sale at very attractive prices -- prices that may not be repeated for many years if the economy picks up.
To show you what's available, I've selected four companies that have delivered good news to the markets this morning -- two of which have delivered dividend increases that should have shareholders smiling over their cornflakes.
IG Group (ISE: IGG.L) FTSE 250-listed IG Group is one of the biggest names in the spread-betting industry and has a 1.7 billion pound market cap.
This morning IG published its preliminary results, revealing a 17% increase in revenue, a 13.8% increase in profit before tax, and a 12.5% dividend increase. This latest dividend hike takes the total dividend for fiscal 2012 to 22.5 pence, giving an impressive 60% payout ratio.
IG Group has no debt and currently trades on a price-to-earnings ratio of 14, giving an attractive 4.3% dividend yield. In my opinion, it's a better value than financial-sector alternative and FTSE 100 member Hargreaves Lansdown (ISE: HL.L) , which is a similar size but trades on a sky-high P/E of 27, resulting in a more miserly 2.3% yield.
Low & Bonar
Today's second dividend hike comes from small-cap materials specialist Low & Bonar.
In its half-yearly results, published this morning, Low & Bonar reports that sales were up 4% on a constant currency basis, helping to boost its operating margin to 6.9%, up from 6.5% in the same period last year.
Pretax profits before amortization and nonrecurring items rose from 7.9 million pounds to 9.6 million pounds, and the interim dividend has been hiked by an inflation-beating 14%, rising from 0.7 pence to 0.8 pence per share.
The markets were underwhelmed by the update, and Low & Bonar's shares lost 2% in early trading, but the company says it is on course to meet full-year expectations, and its current P/E of 10.6 and 3.3% dividend yield look like a reasonable value to me.
Since then, Computacenter has become cheaper, thanks to an update last month warning that it would have to spend more of its profits than expected on infrastructure upgrades to fuel long-term growth.
However, as my Foolish colleague Kevin Godbold explained recently, this could be one of the better types of profit warning. He took the opportunity to add some Computacenter shares to his portfolio, and today's trading update suggests he may have been right to do so.
So far this year, Computacenter has seen a 4% rise in reported revenues, with growth in all of its major markets (the U.K., France and Germany) and a healthy net cash balance of 79.3 million pounds. Its share price is down by around 35% from its March peaks, making Computacenter look surprisingly cheap by IT sector standards with a P/E of eight and a well-covered dividend yield of 4.8%.
Monitise (ISE: MONI.L)
Monitise is a rapidly growing AIM-listed company that specializes in mobile-payment technology. Today's year-end trading update confirms that the company has doubled its revenues for the third consecutive year and that profitability is improving (it has yet to turn a profit). Gross margins rose to 66% over last year's 62%.
This is definitely not a retirement share, but it is delivering strong growth, and mobile-payment technology looks set to boom over the next few years. Monitise's customers -- which include HSBC, Royal Bank of Scotland, and Visa -- certainly seem to think so too.
Monitise is up nearly 7% so far today, but the company expects to double its revenue again next year, and its growth looks set to continue for some time to come.
Picking the winners
Of course, not all companies are beating the recession. Some, sadly, won't survive. Identifying the winners isn't always easy, but one man who has been extremely successful over the years is Neil Woodford.
Neil Woodford is one of the U.K.'s most successful fund managers, and he manages more money for private investors than any other City manager. His dividend-based investing approach has delivered gains of 347% over the last 15 years, compared with the wider market's rather meager 42%. You can find out about eight of Woodford's current biggest holdings in this special free report from the Fool: "8 Shares Held By Britain's Super Investor." It's completely free and can be in your inbox in seconds -- and I highly recommend it.
Are you looking to profit from this uncertain economy? "10 Steps To Making A Million In The Market" is the very latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- it's free.
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At the time this article was published Roland owns shares in HSBC but does not own any of the other shares mentioned in this article. The Motley Fool owns shares in Hargreaves Lansdown. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.