Domino's Pizza UK & Irl Plc has been given a recommendation today on the back of its results yesterday and the announcment that it will pay out a final dividend of 4.25p to be paid out to shareholders on 31st March 2010 who are registered before 26th February '10. This announcment has come as no surprise as DOM has continued to grow this year on the back of great sales and good managment. As i wrote last year many people hard up and not willing to spend money eating out have turned towards takeaway foods. This trend has also seen increases in companies like Cranswick the gourmet sausage supplier and M&S that offer a fine foods range.
Article outlining results published 16th Feb 2010
I invisage we will see an increase in price during the lead up to the 26th. The company looks to be on a great footing quoting like for like sales up 11% in Jan 2010 despite the bad weather and increased demand for new stores to be opened from an estimated 50 to 55 this year.
Another company mentioned earlier this week was Rentokil. AA rated Schrodes fund managers Ian Lance like this stock as it has shown much resiliance not just through this economic crisis but it also continued to perform during similar slumps in 2007.
"Lance highlights Rentokil as one of his top dividend recovery stocks. He argues that the company has been through tough times before and has a strong history of delivering. He said: ‘It has been through similar downturns so in 2007 it made earnings of 9p and dividends of 7p. That dividend has subsequently been cut to 2p in 2009 and is forecast to stay that way in 2010.
‘But we see this as a recovery-type situation. A new management team has gone in with a specific objective to increase profitability.
‘We would think those earnings could get back to anything between 15p to 20p, which could imply dividends going back up to the 7p level. If earnings did get back to 15p shares could be worth over £2, whereas today they are worth £1.19.’
I wrote about this company also last year and outlined that it was in a good finanacial shape. Now I was reading in that same article that 202 companies last year cut their dividends. Generally a good indicator of finanacial position is the amount a company is paying out to its investors in dividends. Again you need to be a little cautious as companies like to continue to pay dividends when they cant afford to. Xstrata is a good example of this taking place recently. Saying this projected profit can also drive the decision to pay out a dividend as was the case with Xstrata.
Broker Recommendations Today
Company | Old Target (current price) | New Target | Broker (s) |
Rothbone Brothers | _ | buy | Daniel Stewart |
RM Group | _ | 165p 165p | Daniel Stewart Singer Capital |
Babcock Intl | _ | buy | Symour Pierce Panmure Gordon |
Balfour Betty | _ | buy | Panmure Gordon |
kelly Group | _ | 612.5 | Panmure Gordon |
Kier group | _ | 947p | Panmure Gordon |
T Clarke | _ | 147p | Panmure Gordon |
Premier Foods | _ | 45p | Panmure Gordon |
| Dominoes Pizza | _ | buy | Seymour Pierce |
| BHP | _ | Buy | ING Barings |
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