Wolseley plc (LON:WOS)
When I looked at Wolseley plc (LON:WOS) in March, I was deterred by its high valuation and low yield. It’s now even more expensive, at 20 times earnings, and the yield is lower still at 1.8%. Yet, this global plumbing merchant has been leaking profits, with half-year results showing an 8.25% drop in group revenue to 6.3 billion pounds. Why so expensive, then? Investors seem to be banking on a rebound in construction, especially in the U.S., where Wolseley plc (LON:WOS) earns half its revenues. They liked its decision to flee France, where the losses have flowed. Or maybe they’re eyeing the forecast EPS growth, which is 7% in the year to 31 July, and 20% in the year to follow. I’m still not convinced. Plumbers are notoriously expensive, Wolseley is no exception.
Schroders plc (LON:SDR)
What is it with the FTSE 100 today? So many expensive stocks. Here’s another one — Schroders plc (LON:SDR) — beating the lot by trading at 23 times earnings. Two months ago, I said it was expensive at 21.25 pounds. Today, you pay 24 pounds. A strong first-quarter update saw profits before tax up 20%, to 115 million pounds, and booming net inflows of 5.6 billion pounds (up from 1.6 billion pounds in the same quarter last year). Total assets under management have hit 236.5 billion pounds, up nearly 12% since Dec. 31. This fund manager is a play on the bull market, and a hugely successful one. It is up 100% over the past five months, against 25% for the index. This looks like a bull/bear stock to me. Bulls will love it; bears will go into hiding. Which are you?
Standard Chartered PLC (LON:STAN)
Standard Chartered PLC (LON:STAN)sidestepped the worst of the financial crisis, but this hasn’t done much for its share price, which is down slightly over three years. That means you can buy it at 10.5 times earnings, half the valuation of the four stocks above. You also get a decent yield at 3.7%, covered 2.7 times. There’s a reason for this, with its recent trading update showing a surprise first-quarter slowdown after a strong start, and a small dip in operating profits. Management said the second quarter looked more promising, and it would still hit recent profit guidance, but the damage was done. Standard Chartered PLC (LON:STAN) is exposed to a China slowdown, which is a worry, with the IMF cutting its Chinese growth forecasts twice in two months. But if you don’t buy FTSE 100 companies when they’re cheap, when exactly do you buy them? When they’re expensive?
The article Should I Buy These 5 Shares? originally appeared on Fool.com.
Harvey Jones doesn’t own any of the shares mentioned in this article. The Motley Fool owns shares of Standard Chartered.
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