Once again it has been techs and telecoms that have lead the FTSE 100 lower. In particular MMO2 and CMG as Merrill Lynch and CSFB went more negative on the software and services group.
VT POPULAR: MARCONI, VODAFONE, UNILEVER, MMO2, GLAXO, BT, BARCLAYS, DIXONS, LOGICA, MANCHESTER UNITED.
VT BUYS: BAA, HSBC, M&S, BAKERY SERVICES, LEGENDARY INVESTMENTS.
VT SELL: COLT
VT POPULAR: UNILEVER
The official classification as far as Unilever is concerned is that of a food producer and processor. Investors seemed to have taken this to heart in terms of flocking to the stock since the trauma of September 11th pushing the shares up by more than 100p to just shy of 600p. Obviously, with the current blood bath in the telecoms sector it is not surprising that the likes of Unilever and Reckitts attract knee jerk support as those with burnt fingers from the TMT zone seek comfort elsewhere. But the company’s Q1 figures illustrate that there is some method behind the defensive madness. The consumer products giant has been able to beat analysts forecast because even though turnover was down, its margins have been increased through greater efficiency. Unilever managed to beat the market largely on the basis that just a couple of months ago it warned that sales growth would be down. Luckily, through focusing on its key brands such as Ben & Jerry’s and Slim Fast – two products that could be said to feed off each other – it has managed to prove the sceptics wrong and remain on target for earnings per share growth of 25 percent.
VT POPULAR: DIXONS
It must be said that anyone looking at the share price chart of High Street electrical goods retailer Dixons would not immediately have guessed that it is part of a sector that is one of the stock market success stories of the last couple of years. It is no exaggeration that the best way of summing up the UK consumer’s attitude to any company that boasts a shop window over the past three years has been to Spend, Spend, Spend.” This is despite the effects of Foot & Mouth and the terror attacks of last year and this service industry strength has ensured that the UK has been one of the stronger of the leading economies. The main question is whether this boom will continue? Unfortunately for Dixons much like Kingfisher, it has never really been able to capitalise on the flood of goodwill surrounding High Street stocks. Some of this may be attributably to the forthcoming departure of founder Stanley Kalms and indeed his sale of 1.8 million shares this week was not the best thing in terms of driving sentiment. Indeed, in the last few days the stock overhang that the Dixons boss created in trying to offload his shares has been enough to drive Dixons down towards 220p. With no new killer product on the horizon in the high tech area for the group to sell, it would appear that the sideways price action of Dixons looks set to continue for quite some time.
Saqib "Zak" Mir, contributes to a number of major publications. His current commitments include Technical Analyst at Shares Magazine, Union Cal and CFD specialist GNI as well as being editor of Investing for Professionals. Mir writes his columns from a personal view. At the moment of publication Mir did not hold any position in the above mentioned shares however positions can change at any moment. The information in this column is not meant as professional investment advice or as advice to do certain investments. Your feedback is welcome at zak@citycomment.co.uk.
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