The sharp sell-off that has smashed global share markets has left some pretty amazing stocks trading at rock-bottom prices. There’s no shortage of such scintillating income shares on the FTSE 100 and I recently picked out a couple from the index that are currently dealing around multi-year lows.
Naturally, there’s plenty of brilliant buys trading for next-to-nothing on the FTSE 250 right now as well. And in this article I plan to discuss a couple of them: Ted Baker (LSE: TED) and Elementis (LSE: ELM).
Ted talks
Ted Baker can currently be found languishing at levels not seen since the summer of 2014, the waves of risk aversion that battered October meaning that the fashion/lifestyle retail star has conceded around 43% of its value since striking the year’s highs above £32 per share in March.
The deteriorating condition of the UK retail landscape that has prompted investors to frantically sell Ted Baker was borne out in half-year numbers earlier this month, in which the business declared that the collapse of department store House of Fraser caused pre-tax profit at group level to duck 3.2% during the 28 weeks to August 11, to £24.5m.
Other parts of the release caused room for celebration, however. I’ve lauded the exceptional progress the retailer is making in cyberspace and the latest release confirmed this trend, with e-commerce revenues exploding 24.1% in the first fiscal half.
With the business also continuing its global expansion drive — it opened an extra nine stores across Europe and the US in the six-month period — it’s hardly a shock that City analysts are forecasting its long history of earnings growth to carry on, with advances of 6% and 9% for the years to January 2019 and 2020, respectively.
And this means Ted Baker is anticipated to keep its ultra-progressive dividend policy rolling, too (indeed, the business hiked the interim dividend 7.8% to 17.9p per share on the back of this). Right now, City analysts expect last year’s payout of 60.1p to rise to 65.5p in the present period, and again to 72.5p next year. Consequently, yields for these years sit at a chubby 3.6% and 4%, respectively.
The recent share price weakness at Ted Baker also means that it carries a forward P/E rating of 13.6 times, comfortably inside the value terrain of 15 times and below.
Chemicals fix
Another recent faller from the FTSE 250 that value chasers need to check out is Elementis (LSE: ELM), the chemicals company sporting a prospective earnings multiple of just 14.1 times.
October’s selling frenzy means that it trades at depths not visited since the summer of 2016. This comes despite Elementis advising in a reassuring third-quarter trading statement in recent days that “demand remains strong with supportive pricing momentum expected in 2019.”
Reflecting this favourable backdrop, City brokers are predicting that earnings will rise 7% in 2018, and 10% in 2019. Thus the number crunchers are expecting that dividends will keep rising, and a 9 US-cent-per-share reward is forecast for this year, with a 9.7-cent one for 2019. Yields thus stand at an inflation-trumping 3.3% and 3.6% for these respective years. As profits rise and booming cash flows drive down debt, I’m expecting dividends to keep on impressing.
