Beginners' Portfolio: Watchlist Update
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LONDON -- Over the past couple of months, I've pretty much neglected our Beginner's Portfolio watchlist. I have been keeping an eye on the shares in it, but there's really been little to move -- other than to actually buy shares in BAE Systems, which really wasn't on the list for very long before I realized I couldn't resist.
So, here's an update on what our watchlist shares look like now, as we reach the Christmas holidays -- and you should spot a couple of new additions.
|Company||Market Cap |
|Forward P/E||Forward Dividend|
|WS Atkins||769 million||762||9.8||4.2%|
|TUI Travel||3.2 billion||286||10.7||4.4%|
|United Utilities||4.6 billion||681||16.5||4.9%|
|Trinity Mirror||248 million||94||3.3||0.2%|
|Daisy Group||256 million||94||6.8||1.7%|
The first thing to note is that WS Atkins has put on 8.5% in the past three months, taking the share price to 762 pence. The price did actually plunge on the approach to the firm's interim results on Nov. 15, dropping as low as 638 pence. But the results were just as the firm's earlier update had suggested, everything was in line with expectations, and the price powered back up again. But the shares are still on a forward price-to-earnings ratio of just 9.8, and missing the recent rise doesn't mean we should ignore further potential undervaluation.
TUI Travel has continued its surge, gaining a massive 24% to 286 pence since I featured it in September. Before the travel firm's full-year results, I noted "a forecast dividend of 5.1% from a share on a P/E of 10, and no debt," so maybe I should have acted on that -- the results were very strong, as expected. But we'll always miss short-term opportunities, and looking ahead to forecasts for the year to September 2013, the shares certainly don't look overvalued.
On to the two new entrants in the table, Trinity Mirror and Daisy Group.
I've been watching both for quite some time myself, and at its lowest point, Trinity Mirror shares looked to be ludicrously undervalued. A lot of that was emotional, especially during the days under the leadership of the unpopular Sly Bailey. In addition, many people think that printed newspapers are as dead as the trees they're made from. But people have been saying that about printed reading material for years, and Trinity Mirror is still expected to carry on making decent profits. Current forecasts put the shares on a P/E of just 3.3, even after the share price has more then trebled since August, which still seems silly. This could be one for further investigation in the New Year.
Having a telecommunications background, I've always had a soft spot for small telecoms companies -- even though I expect many to be failures in the long term. But every now and then, one comes along that looks promising, and I think Daisy could be one. One thing I hadn't realized until I recently read a September article by fellow writer G A Chester is that Neil Woodford's investment funds are heavily invested in Daisy. So this is another one for a January analysis.
Next week is a holiday week, so I've prepared a quick look at my idea of how beginners should approach the whole vexed question of how to value shares, which you can read at your leisure.
And next week there will also be a new look at the valuation of our portfolio. I don't want to give too much away, but it's looking like a satisfactory end to the year.
Finally, a big part of the Beginner's Portfolio is based on a strategy of buying strong dividend-paying shares, and Neil Woodford is an acknowledged expert on it. The free Motley Fool report "8 Shares Held by Britain's Super Investor" takes a look at some of his major holdings, and I strongly recommend learning from successful investors as part of the beginners' process. Click here to get your free copy, while it's still available.
The free report "10 Steps to Making a Million in the Market" is also one I'd urge beginners to have a read of, because it's inspirational and it really does make a convincing case for the great potential of long-term investing in quality companies.
The article Beginners' Portfolio: Watchlist Update originally appeared on Fool.com.Alan Oscroft and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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