5 Shares You Should Have Bought in August
LONDON -- We had another pretty flat month for the FTSE 100 (UKX), which ended August on 5,711 points. That's 76 points (1.3%) up on July's close of 5,635 points, and while that's not the bull market we might perhaps like, 1% a month should suit Foolish investing just fine.
But whatever the index is doing, we had some strong share performances during the month, and we take a look at five of them here. As usual, these aren't just shares that went up, but companies that could have a nice longer-term story to tell, too.
Cape (ISE: CIU.L) , the engineering services contractor, has seen its share price severely punished this year. It was up around 520 pence 12 months ago, but when we heard of a downturn in the firm's Far East and Pacific Rim division, due to delays and contractual problems, the price slumped. It dropped to under 190 pence just ahead of August's interim report, which many feared would paint an even gloomier picture looking forward.
But it didn't, and the shares have recovered nicely to end the month on 242 pence.
Although an expected 65% fall in pre-tax profits was revealed, revenue was actually up by 9.8%, the interim dividend was maintained at 4.5 pence per share, and there's a strong forward order book. New chief executive Joe Oatley said: "I am pleased to say that, having carried out an initial review of all of our operations, I continue to believe that the core of the business is fundamentally strong." If the full-year dividend is maintained, it should be around 6%. The recovery could be on.
Online gambler 888 Holdings (LSE: 888.L) had a storming August, and at its half-year point, it turned last year's interim pre-tax $22.1 million loss into a profit of $18.4 million, and reinstated its dividend. At 2.5 cents per share, the payout is not huge, but current City forecasts for the full year are suggesting a yield of around 3% on the 84 pence shares.
Although the shares have put on more than 150% over the past 12 months, they're still down around 60% since their 2006 peak -- but we have had a rather serious financial crisis in the meantime. The interim report was upbeat about the future, with the firm planning to increase its investment in Spain, where it has a good market share. This could well mark the beginning of a nice turnaround.
Over in the gold mining business, the stabilizing situation in Egypt helped Centamin (ISE: CEY.L) to a record-breaking 40% second-quarter increase in production, to 67,422 ounces, pushing the price up to end August on 79.5 pence, 12.9 pence (19%) ahead on the month.
While there might be justified skepticism regarding gold-geared investments, Centamin's production costs amount to $720 per ounce, with selling prices up around the $1,600 mark. I, for one, expect the gold price to fall as world economies improve and cash moves back into shares, but that still leaves plenty of room for profit.
And with current forecasts putting Centamin shares on a forward price-to-earnings (P/E) ratio of only 7 for December, falling to 5 for 2013, the gold-fired pessimism may well be overdone.
Unite Group (ISE: UTG.L) was among the FTSE's biggest August risers, gaining 33 pence (15.5%) on the month to 245 pence, after releasing pleasing interim figures. The developer and manager of student accommodation achieved a doubling of pre-tax profit to 33.5 million pounds, and a trebling of adjusted earnings per share to 9 pence, allowing it to double its interim dividend to 1 pence per share.
That's not a massive payout, and full-year forecasts suggest a yield of only around 1% from shares on a perhaps heady P/E of 26. But what we have is a play on both rising student numbers and on the property development market, so we could be looking at a highly valued share that is set to stay that way.
The insurance and pensions provider Chesnara (ISE: CSN.L) looks like it could be a nice small-cap bargain after ending August with a pretty upbeat interim report, which lifted the shares 22 pence (13%) over the month, to 186 pence.
A stronger-than-expected first half saw a 145% rise in profits to 9.3 million pounds, though on an EEV basis it came in at 20.3 million pounds, against a 0.4 million pounds at the same stage a year ago. Cash generation has been strong, and the firm upped its interim dividend to 6.1 pence per share, from 5.95 pence.
Where does that put the shares now? Well, current forecasts indicate a full-year dividend of over 9%, and with the board saying it "remains confident about future dividend flows," confidence in it must be high -- though it may not be covered by earnings, there seems to be enough cash around.
If you want more good dividend-paying shares like these, Neil Woodford is an acknowledged expert in that strategy, and the free Motley Fool report "8 Shares Held By Britain's Super Investor" takes a look at some of his major holdings. Click here to get your free copy, while it's still available.
Further Motley Fool investment opportunities:
- 5 Opportunities For The Week Ahead
- 3 More FTSE Shares Hitting New Highs This Month
- 10 Steps To Making A Million In The Market
Alan does not own any shares mentioned in this article.
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