We’ve seen something of a pattern in August, as sectors that were unfairly battered in the immediate aftermath of the EU referendum have been coming back. But which shares have done best?
Insurance rebound
In the insurance sector, Standard Life (LSE: SL) has done very nicely with a 36% rebound since the shares’ low point on 6 July, reaching 358p today. Standard Life shares are now more highly valued than they were on Brexit day, despite a sharp drop immediately afterwards. Along with the general recovery in the sector, first-half results on 9 August helped too, showing boosts across the board, so are Standard Life shares still worth buying if you missed the panic sale?
A strong earnings forecast for the full year puts the shares on a forward P/E of 13.7, which is slightly below the long-term FTSE 100 average, and that would drop to 12.6 on 2016 predictions. That alone wouldn’t attract me, but dividends expected to yield 5.5% this year and 5.9% next tip the balance — and just think, if you’d bought after the initial Brexit panic, you could have locked in effective yields of 7.5% and 8.1%!
Keep an eye out for other likely insurance bargains too — Aviva is up 21% since the crash, with RSA insurance up 12%, both on lower 2017 P/E ratings.
Solid housing
There’s been a housebuilding resurgence since the post-Brexit depths, with Barratt Developments (LSE: BDEV) one of the FTSE 100’s biggest winners in August. If you’d got in on 6 July, you’d be 50% up today with the shares on 500p. That’s not back to pre-vote levels yet, but it does highlight the irrationality of those who thought the UK’s chronic housing shortage was suddenly going to end once we leave the EU.
Barratt shares are now on a forward P/E of only 9.2, and even though the earnings growth of the last few years is set to slow, that still looks like a buy to me — especially as there are dividends yielding better than 6% on the cards, and they’d be strongly covered by earnings.
The other major housebuilders have performed similarly in August — Taylor Wimpey shares are up 42%, Persimmon up 46%, and Bovis Homes up 42%. And they all still look good value to me.
Potash profits
Turning away from the Bexit effect, just look what’s happened to Sirius Minerals (LSE: SXX)! The company, with its Potash project in North Yorkshire, has seen its share price soar by 140% since 6 July, and by 71% in August alone, to 44.6p as I write.
Receiving the last major bit of regulatory approval in late July, for the development of harbour facilities, removed a chunk of uncertainty, and a reduction in costing estimates has provided another boost — predicted costs for the first and second stages of construction are now down 18%. Interim results released on 16 August also included an increased estimate of the likely polyhalite potash reserve, and reported further take-off agreements.
I’ve been optimistic about Sirius from the start, but it’s always been a risky investment with cost estimates necessarily uncertain and the eventual sources of funding unknown. It’ll still be years before there’s any profit coming in, but recent developments are positive and I still see Sirius Minerals as a decent speculative punt.
