Insurance colossus RSA Insurance Group (LSE: RSA) shrugged off fears surrounding the implications of Brexit with strong half-year financials on Thursday.
RSA struck 11-month peaks above 500p per share today after reporting that underwriting profit clocked in at record highs of £119m during January-June, up 72% from £73m in the corresponding period last year.
This was despite claims related to weather and other large events coming in £59m worse than planned.
RSA’s huge international presence has calmed investors fearful of deteriorating conditions in the UK — indeed, chief executive Stephen Hester advised that although the impact of June’s referendum “will take time to play out… RSA is well placed, with a majority of earnings in foreign currencies.”
And despite possible headwinds created by low interest rates, the firm’s long-running restructuring plan should also help to keep RSA moving in the right direction, in my opinion.
Given its resilience in difficult and volatile markets, I reckon a forward P/E ratio of 16.1 times is great value.
A pretty picture
Camera maker Vitec Group’s (LSE: VTC) latest update on Thursday also lit up the market, the stock leaping 5% on the day to four-month highs. Vitec announced that revenues grew 9.7% between January and July, to £171.1m, a result that pushed pre-tax profit 6.2% higher to £15.5m.
The firm’s Broadcast division performed well by “investing in product development and launching a number of innovative products and services,” chief executive Stephen Bird noted, while new products and improvements to its distribution channels boosted sales at its Photographic arm.
Vitec is clearly making waves in a rapidly-changing technological marketplace, and I believe the stock is a snip on a forward P/E rating of 9.7 times. And a chunky 4.7% dividend yield seals the investment case, in my opinion.
In poor health
Stocks guru Neil Woodford’s investment vehicle, the Woodford Patient Capital Trust (LSE: WPCT), hasn’t fared well in recent months however. The trust saw net assets clock in at £717.9m as of June, down from £805.3m six months earlier and £814.9m at the same point in 2015.
Woodford Patient Capital chairman Susan Searle noted that “the company experienced a challenging half-year period that reflected both a turbulent market for small-to-medium-sized quoted companies and the uncertainty that surrounded the EU referendum.”
But Neil Woodford commented that “sometimes, the share prices of quoted early-stage businesses will be volatile and they may sell off in small volume for no fundamental reason,” adding that “considerable progress has been made across much of the portfolio.”
In particular, Woodford hailed the “meaningfully positive and noteworthy news” of fund constituents like Prothena, 4D Pharma and Immunocore in underlining the trust’s strong long-term growth prospects.
Turbulence is par for the course when investing in early-stage pharma, and investors often need to exercise a lot of patience. So while the healthcare sector offers plenty of opportunity, I believe risk-averse and/or short-term investors should give Woodford Patient Capital a miss, certainly for the time being.
