4 Shares I Might Buy in October
LONDON -- October will see results and updates from a number of companies I'm interested in. I already own shares in one of them, but would consider buying more at the right price. I don't currently hold the other three, but they're on my watchlist.
I'll be reading the announcements from all four companies very closely and weighing up whether the time is ripe for me to put some cash into any of these shares.
Can I clean up with this share?
Reckitt Benckiser (LSE: RB.L) has third-quarter results scheduled for Oct. 24. The FTSE 100 household goods giant -- whose brands include Cillit Bang, Vanish, and Nurofen -- said at the half-year stage that it was well-positioned to achieve its full-year financial targets for 2012.
Reckitt's shares are currently trading around 3,600 pence. Analysts are forecasting earnings per share of 248 pence, giving a price-to-earnings ratio of 14.5, and a dividend per share of 129 pence, giving a yield of 3.6%. Reckitt's rating is relatively cheap compared with rival Unilever, which is on a forecast P/E of 18 and dividend yield of 3.4%.
Reckitt's share price is little changed from the level it reached at the end of 2010, a few months before it was announced that longstanding chief executive Bart Becht would be retiring. Unilever's shares have risen more than 20% over the period. Nevertheless, despite their relative cheapness, I would like to see Reckitt's shares and rating a bit lower before adding to my holding.
A copper-bottomed investment?
Antofagasta (LSE: ANTO.L) is a company I've long admired. Indeed, I've held shares in this Chilean copper miner in the past. One of the things I particularly like about it is its excellent record of rewarding shareholders with hard cash dividends.
The price of copper is very sensitive to shifts in the economic outlook because the metal is used in so many industries. This means Antofagasta's earnings can be lumpy. The company has a policy of paying out a fairly modest ordinary dividend that is sustainable through the economic cycle and hefty special dividends in bumper years. Shareholders share in the success of the company in a very tangible way!
Antofagasta's shares have recovered from their summer low of less than 1,000 pence and are currently trading at 1,300 pence. Having failed to avail myself at the time of the summer dip, the current price and P/E of close to 15 don't appeal. Nevertheless, I'll be reading the group's third-quarter production report -- due on Oct. 31 -- to see if management's full-year forecast production numbers remain on track: 700,000 tonnes of copper, 280,000 ounces of gold, and 11,000 tonnes of molybdenum.
Is there value in this spicy share?
Vedanta (LSE: VED.L) is a company I've never fully made my mind up about. I like the fact that this Indian mining giant has become more of a natural resources conglomerate, having acquired or developed oil and gas and electricity-generation interests. I can also see that after a period of heavy capital investment, earnings should start to come through from these assets.
On the negative side, Vedanta has corporate governance issues, a complex corporate structure (though it has started to address that), and a running history of wrangles with the Indian government, legal system, and provincial authorities.
Like Antofagasta's shares, Vedanta's have rebounded since the summer. They're currently trading around 1,050 pence -- they were less than 850 pence a couple of months ago -- but are still on a P/E of less than 8. I'll be taking a close look at the company's first-half production numbers, which are scheduled for Tuesday.
A sliver of silver for my portfolio?
The fourth company I'll be watching in October is another miner, but this one mines precious metals, mainly silver. Hochschild (LSE: HOC.L) is a FTSE 250 firm with operations in South America and is another share I've held in the past.
Hochschild has a nice portfolio of existing operations and an interesting pipeline of advanced projects, drill targets, prospects, and land packages. Just this week, the group announced a key milestone for its Inmaculada Advanced Project: namely, the approval of an Environmental Impact Study by the Peruvian government. Production is expected to commence in the fourth quarter of 2013.
Like all precious metals miners, Hochschild is on a sky-high P/E: more than 30 for 2012 at the current share price of 505 pence, falling to 22 for 2013. I like the idea of having a little bit of exposure to precious metals, and I'll be keenly reading Hochschild's third-quarter production announcement, which is due on Oct. 18.
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Further investment opportunities: