investment column: bunzl\'s dull update is good for investors
Bunzl, which distributes a variety of products, including food packaging and catering equipment, released a rather dull update yesterday.
Not that dull is bad: it is good to be dull when dull means increasing profit margins after lowering costs.
Bunzl reported a little weaker first-quarter earnings than some expected, but this comes down to currency changes, with sterling stronger in the first three months of this year than in the same period in 2009.
The outlook statement is cautiously optimistic, and Bunzl acknowledges that while the world\'s macroeconomic situation remains unoptimistic, its business \"should be well developed\" due to the positive impact of revenue growth and cost reduction initiatives \".
It is clear that this is a stable ship, supported by a strong balance sheet, which drives its aggressive strategy.
But that doesn\'t mean you should jump on board.
After reaching 652 p in October, we now feel that Bunzl\'s share price is rising and has risen above since the end of January alone.
In terms of multiples, it trades on the 13th.
Panmure Gordon\'s forecast for 2010 is 6 times.
Although it yields around 3 cents, we tend to agree with those who think the rating now fully reflects the outlook for Bunzl.
However, given the yield and room for growth, we see no reason to sell stocks.
Prices should not be reversed unless there is a major, disturbing event.
For example, a sudden decline in the world economy could trigger a sell-off --
Stocks considered to be of sufficient value (
But in the case of Bunzl, this weakness may represent a new purchase opportunity).
But in any case, we don\'t expect such a catalyst.
Indicators are steadily turning positive, and should continue to improve in the foreseeable future, in addition to occasional ups and downs.
Bunzl is a solid and reliable stand.
Price: 122 p (+11. 2p)
The interim management statement issued by senior management yesterday was generally positive.
Aircraft and engineering parts suppliers reported that the deal was in line with expectations, higher profit margins, healthy cash flow and a decline in debt over the next three months.
The aerospace sector, which accounts for nearly 60 of sales, is particularly active.
While the Flexonics sector is still being dragged down by the manufacturing downturn, especially in the automotive sector
Over the past 18 months, concerns about a slowdown in aircraft production have largely failed.
Both Boeing and Airbus have reiterated their confidence forecasts for this year and will increase production from next year.
The delayed Boeing 787 \"Dreamliner\" finally made its maiden flight before Christmas and is now scheduled to be delivered for the first time by the end of the year.
Dreamliner is the most valuable senior model ever, so the prospect is good.
All of this is good stuff, and some analysts have retained their \"buy\" suggestions based on prospects like this.
In the case of Investec, it is a multiple of 11.
2 times full Forecast-
Annual earnings show that the company owns the company\'s shares, and the share price has risen more.
But we have another view.
Senior\'s shares fell off the cliff with the global economy in the fall of 2008, but they have been climbing since last spring and are now in the forefrontcrash levels.
Plus yesterday\'s harvest, and the strong news from the plane --
The manufacturer has already priced it and it\'s time to cash it out. Sell.
View: holding stock price: 95 p (-6p)
As a result, with STV selling losses, the iconic Pearl and Dean advertising businesses are developing again --
Operate for 1 pound.
This is a major news in the media group\'s trading statement yesterday, although investors are equally happy to see that the company\'s trading is in line with expectations at a time when TV commercials recover at a relatively fast pace (
It is expected that the national TV advertising will increase by 21 percentage points in April and 23 percentage points in 5 months. )
So trading at 2010 times the forecast yield is a clear buy, right?
There are some problems.
STV still has high debt (£55m)
Plus the 27-pound pension deficit, it\'s a bad-looking figure.
Then there is a legal dispute and prospect statement with ITV, which does not mean full confidence in its prospects.
As a result, STV is cheap but there are also some problems.
The business seems to be moving in the right direction (
Sales of P & D in particular)
So it may be small holdings. But no more. Hold.