The FTSE 100 has got off to a sluggish start this week but there should be plenty of excitement ahead with a host of companies reporting their latest results. So what can investors expect from these three stocks, all of which report on Tuesday 1 March?
Glencore
Mining giant Glencore (LSE: GLEN) is starting to put last year’s nightmare behind it. Having begun 2016 at 88.50p, it has since surged to around 134p, a rise of more than 70%. Brokers remain confident of further excitement, with Citigroup and UBS both still calling Glencore a ‘buy’ with target prices of 140p and 160p, respectively.
That’s quite a turnaround for a company whose credit rating was cut to one notch above junk by S&P in early February. Management has been rewarded for its ambitious plans to slash the company’s $30bn debt pile, by cutting costs, offloading assets, raising equity and halting its dividend. Signs of a rally in metals and oil prices have also helped boost sentiment and encourage contrarians.
You can buy Glencore at around 8.5 times earnings despite the recent rally but I’m not convinced that commodity stocks are out of the woods yet. I’ll be looking for signs that debt is under control and management is confident it can withstand several years of low prices before adding my voice to the growing list of ‘buy’ recommendations.
Regus
Office outsourcer Regus (LSE: RGU) has had a storming five years, rising 167% in that time, against negligible growth for the FTSE 100 as a whole. Its third-quarter results showed group revenues rising almost 16% from £413.6m to £478.8m, while healthy profitability and cash flow has allowed management to reinvest in the business with the aim of building incremental long-term shareholder value.
Regus is easy to overlook but Credit Suisse has taken notice, rating it an “outperform” with a target price of 400p, which would suggest nearly 40% upside from today’s 288p. It isn’t immune to wider economic concerns, the share price is down 14% over the past three troubled months, and its ambitious long-term acquisition growth strategy could sacrifice earnings in the short term. I’ll be looking for evidence that management can justify today’s supersonic valuation of 39 times earnings.
Fresnillo
While the big metals giants were in a hole last year, gold and silver miner Fresnillo (LSE: FRES) was a glittering success. This year has brought joy for investors, with the share price leaping 44% from 703p to 1,018, as precious metals have lived up to their reputation of a safe haven in times of trouble. The gold price is up 9% over the last month at $1,233 an ounce while silver is up just 3.2%, but Fresnillo has outshone them both.
Last month it announced healthy increases in both gold and silver output, beating previous guidance, and management was also optimistic about future production. Investors will be hoping for more bullishness tomorrow. With even former Bank of England governor Mervyn King now warning of an economic crash, gold (and silver) bugs could still have their day, and so could Fresnillo.
