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The Forward Look, w/c 21 February


Nick Raynor’s thoughts on what to expect from companies announcing results in the coming week.


Hammerson (preliminary results)

Results from the property sector have been fairly positive recently and investors will be hoping for more of the same from Hammerson. Valuations have been rising in the UK, but Hammerson has more of a European portfolio so it will be interesting to see how valuations have improved in other regions.  We currently list Hammerson as a HOLD



Wolseley (trading statement)

Wolseley has been subjected to several broker downgrades recently and had its share price targets cut. Some may see this as a big negative; however it is due to the company’s success and vast improvement in its fortunes forcing the share price higher. These results will have to be quite special to put a halt the negative sentiment currently circulating the stock.  We currently list Wolseley as a HOLD



Rexam (preliminary results)

Rexam is one of the world’s top five consumer packaging companies. Negotiations with customers have been ongoing since the start of the year and the company has recently successfully finalised several contracts in North America. Volumes look set to suffer in 2011 but will be regained by 2013 due contract terms. Material costs are always an issue for Rexam and any opportunity to improve margins is a success. Figures should be solid and we remain confident of our ‘hold’ stance.  We currently list Rexam as a HOLD



British American Tobacco (preliminary results)

Emerging markets will be the key area for British American Tobacco (BAT) in these results. Other tobacco companies have noted that the mature markets are starting to suffer as price rises and smoking bans start to have an impact. BAT has a huge global presence and should be able to overcome short-term fears for now. We are likely to continue to recommend investors ‘hold’ the stock, as the yield is attractive to many.  We currently list British American Tobacco as a HOLD

Centrica  (preliminary results)

Higher gas prices, colder weather and increasing customer numbers should make for good reading. Centrica has been one of our favourites for some time now as the company offers investors steady growth along with a reasonable yield. Unless these figures are disastrous we are highly unlikely change our view.  We currently list Centrica as a BUY

Royal Bank of Scotland (full year results)

Positive figures from Barclays have raised hopes that the other large banks, such as RBS may provide something similar. We don’t think this will be the case and would advise investors see any positive bounce in the share price as an opportunity to ‘sell’.  We currently list RBS as a SELL

RSA Insurance (full year results)

Bid speculation is circulating the sector and RSA Insurance has been at the forefront of this. Rumours are that, along with Resolution Group they may bid for some of Aviva’s assets. The company update in January blamed bad weather for poorer figures and investors will hope things have changed for the better since then.  We currently list RSA as a SELL



Lloyds Banking Group (full year results)

Bankers’ bonuses and profits will be the main interest to the market from these results. We would like to hear more about talk of the bank splitting its divisions in a similar fashion to RBS, however we suspect investors and the public will be interested the figures.  We currently list Lloyds as a HOLD


To understand how our Advice team arrive at their views please read our Investment Research Policy.


Economic diary


Economic announcements  w/c 21 February 2011

23 February Minutes of the Monetary Policy Committee Meeting held on 9 & 10 February – Bank of England


With growing expectations that interest rates may be rising soon, the latest set of minutes from the Bank of England Monetary Policy committee is being awaited with much anticipation. Last month Martin Weale joined Andrew Sentance in voting for a hike in interest rates. Adam Posen voted for more quantitative easing. Did the February meeting see more members join the cause of those who want to see rates rise? Despite recent rises in inflation, did Mr Posen vote for more QE again? And did the minutes hint that other members are coming round to the view that interest rate rises will be required soon?

24 February Quarterly Distributive Trades – CBI


The CBI distributive trades survey will be of especial interest, because it will provide the first data on how well the retail sector performed in February. Typically the CBI survey has been presenting more positive results than surveys from the BRC, or the official data from the ONS. In fact, the December index hit 57, the highest reading since April 2002. However, the CBI data related to the early part of December, and snowfalls later in the month meant retail sales in December were much lower than the CBI survey seemed to imply. The index for January fell back, dropping to 37. Although this was quite a significant fall, even the reading for January was unusually high and pointed to a robust recovery in sales once the weather improved. Will the index for February remain at an unusually high level?

Other economic announcements include:


22 February

Public Sector Finance, January 2011 – ONS

US Consumer Confidence – Conference Board

24 February

Service Sector Survey – CBI

25 February

UK Output Income and Expenditure – Q4 2010 – ONS

Business Investment – Q4 2010 Provisional Results – ONS

US Gross Domestic Product Q4 2010 (Prelim) – BEA

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