Friday 8 June 2012

The Top 5 FTSE100 Stocks to Invest in now


We will look at the 5 best investment opportunities in the FTSE 100 right now. Based on the valuation method we looked at previously we will look at five potentially good FTSE 100 stock investments. I have excluded companies that are showing downtrending prices and companies that have large amounts of insider selling at the moment.

The Top 5


The table below shows the top 5 at the moment:


Stock
Ticker
Expected Annual Return
Standard Life
SL.
8.06%
Scottish & Southern Energy
SSE
7.46%
National Grid NG 6.72%
Marks & Spencers MKS 6.29%
GlaxoSmithKline GSK 6.12%





One insurance company, two energy companies, a retailer and a pharmaceutical company.

Standard Life


Top of the list is Standard Life. Personally I don't like investing in insurance companies but based on the figures and data we have they look attractive.

Using data from digital look Standard Life has a high dividend yield of 6.4% based on a share price of 217p. The current dividend cover is 0.9 which makes it look a bit risky but forecasts going forward look positive. The dividend has been rising steadily from 11.5p a share in 2007 to 13.8p last year. Analyst forecasts going forward give a 15.27p a share dividend for 2013 giving an annualised dividend growth of over 5% a year.


The technical price action is also positive having broken its 100 day high in February. At the moment the price is hovering over its 100 day low but is holding up and this could represent a good buying opportunity.

There has been some slight insider selling but on balance the directors dealings look fairly balanced.


Scottish and Southern Energy


Scottish and Southern Energy which we reviewed recently comes second on the list.

The current dividend yield is 6% with a reasonably stable 1.4 dividend cover. Again the dividend has been rising from 60p in 2008 to 80p in 2012. Forecasts for 2014 are over 87p giving a growth rate of over 4% a year.


The price action is generally good with the 100 day high broken in March and tested again recently.

There was a lot of insider selling last June but the directors have been buying back recently.



National Grid


Our next energy company is National Grid.

The current dividend is 6% with a cover of 1.3. The dividend has been rising steadily and now stands just over 39p a share. Forecasts going forward put it at over 41p a share in two years time giving us a modest growth rate of less than 2.5% a year.


The price action for this stock looks very positive with the 100 day high being continually broken showing a strong uptrend.

There has been some modest insider buying this year following some big sell offs last year.


Marks and Spencers


Marks and Spencers is a general food and clothing retailer based in the UK but is beginning to expand overseas especially in emerging markets.

The current dividend yield is 5% with a good dividend cover of over 2. The dividend is fairly stable and has increased from 15p a share in 2010 to 17p in 2012. Forecasts for 2014 are just under 19p a share giving an annual growth rate of over 5% a year.


The share price tends to move up and down. It broke its 100 day high in the spring and has fallen back since a peak in April

GlaxoSmithKline


Finally we have pharmaceutical giant GlaxoSmithKline.

The dividend yield is currently 4.9% and the dividend has been continually rising. Back in 2007 it was 53p a share and has risen every year for the last 5 years to be at 70p a share for 2011. The forecast for 2013 is just under 79p a share giving an annual growth rate going forward of over 6% a year.


The price action is also positive with the 100 day high continually being broken. It's hovering over its 100 day low at present which could indicate a good buying opportunity.

There has been some insider selling but this is negligible in comparison to the total directors holdings.



3 comments:

  1. What about Aviva and RSA? There have higher dividend yields than Standard Life

    ReplyDelete
  2. Aviva and RSA are not on the list as they are currently downtrending (they have recenlty broken their 100 day lows). For individual stocks I take this as a warning signal that something fundamentally might be wrong with the stock that is not shown looking at fundamental analysis alone.

    Similarly I have excluded stocks like BT and Centrica which have had a lot of insider selling by the directors recently (see www.digitallook.com for more information)

    ReplyDelete
  3. 5 months on, see how they performed:
    http://completeportfolio.blogspot.kr/2012/11/the-top-5-ftse-stocks-how-did-they-do.html

    ReplyDelete