September 2012
UK Value Investor Value Investing for Income and Growth
Coping with sideways markets John Kingham, Editor
V
italiy Katsenelson wrote a book published in 2010 called The Little Book of Sideways Markets. I’ve mentioned this before I’m sure, but it’s an idea that I keep coming back to because it so perfectly sums up the current environment both in the short, medium and long-term. In the last month the FTSE 100 has gone from about 5,700 to 5,750. It started the year at 5,600, was at 6,000 5 years ago and first moved above 5,500 in 1998. Of course if you look at a long-term graph you can see the index gyrating up and down in a range between about 3,500 and 6,500. This means that if you can time it right there are still huge gains to be made, even in a sideways market. But that doesn’t change the perception of a sideways market for most private investors. They’ll tend to look at the 10 year results (or 1 year more likely) and come to the conclusion that equities have had their day; that the safety of government bonds or bank savings accounts is the place to be. For those of us who have been around a while, a sideways market means something else entirely. It means that growing companies are available at prices which represent better and better value. If the underlying company is growing in terms of revenue, profits and dividends, then a flat or falling share price may be exactly what the alert investor is looking for. They may not be as exciting as bull markets, but bear markets and sideways markets are where the real money is usually made.
Contents Market forecast and tactical asset allocation
Page 2
Model portfolio review
Page 3
Buying: A leading mining company joins the portfolio
Page 6
FTSE 350 Rankings: The easy way to find high income and growth
Page 9
Special note to readers
Page15
UK Value Investor is for investors who want to make their own investment decisions and are capable of doing so without professional advice. If you think you need advice then you should seek a professional advisor. Please see the important notes on the back page for further information. Page 1 Photo credit: George Rex
Market forecast and tactical asset allocation FTSE 100 is still cheap… just Given my opening comments on this seemingly eternal sideways market, it should be no surprise that the market’s valuation has not changed significantly. At around 5,700 it is still in the cheap range with 7 year forecast returns slightly above average. I guess this is why so much of the media talk incessantly about today’s news, because at least if you do that there is always something to talk about. Unfortunately, some of the best minds in the investment world have long had to grapple with the idea that what goes on today is generally of little consequence to investment results many years from now. It is times like this, when the market is going nowhere month after month, that dividends really come into their own. With the index level and share prices zig-zagging within a range, one of the best ways to drive a portfolio higher is to reinvest the dividends of high yield shares. It’s like having the wind at your back, instead of being stuck in the doldrums. FTSE 100 Range
Description
7 Year Forecast Annual Returns (including dividends)
11,600 - 13,900
Bubble
-3% to 0%
9,300 - 11,600
Bull Top
0% to 3%
6,900 - 9,300
Expensive
3% to 8%
5,800 - 6,900
Normal
8% to 10%
4,600 - 5,800
Cheap
10% to 14%
3,500 - 4,600
Bear Bottom
14% to 19%
2,300 - 3,500
Depression
19% to 26%
With the market going nowhere, the tactical asset allocation model has also barely moved its asset split. I have slightly changed the wording on this graphic so that it more accurately its true intent. Asset allocation in this case is for investors who are worried about the risk of their investments falling in value. The cash buffer is there to reduce this risk, and is adjusted according to the amount of risk implied by the FTSE 100’s valuation. A higher valuation implies more downside risk, requiring a larger cash buffer. Currently the cash buffer is slightly below the default level of 1/3rd. This is because a cheap market means a drop in share prices over the medium-term is less likely than usual, so less downside protection is required, according to this model.
Downside Risk Protection
Stocks, 80% Cash buffer, 20%
Page 2
Model portfolio review Another positive month You can see from the graph below that the market has been in an upswing in recent months. So far this has worked to the model portfolio’s advantage, with returns in the year to date at an unsustainably attractive 14.9%. That compares well to the wider market’s 6.6% total return. More importantly, even at this higher valuation the portfolio still has a yield more than 1% clear of the benchmark. In relative terms this is a 29% increase in income. The reinvestment of dividends, especially high yield dividends, is one of the main drivers of long-term returns. Centrica is now part of the portfolio following the buy alert of last month. The shares were bought at £3.22 on August 10th and as with most holdings, will probably be in the portfolio for several years, but you never know. A sharp rise in share price could lead to an early exit. Chemring has had a preliminary take-over offer, which I’d rather avoid as it would force the portfolio to realise a loss on those shares. Some better news is that more dividends arrived this month, amounting to £168 from Vodafone, Chemring and MITIE.
Model Portfolio Total Return
FT SE 100 Tracker Total Return
15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Mar-11
May-11
Performance (%)
Jul-11
Sep-11
Nov-11
Jan-12
Ma r-12
May-12
Jul-12
Sep-12
Yield
1y
YTD
2011
From inception
Model Portfolio
4.9
8.9
14.9
-6.9
6.9
Index Tracker
3.8
7.4
6.6
-3.4
2.9
Relative to Index Tracker
1.1
1.5
8.3
-3.5
4
Cash Results
Current Capital Value
Rolling 12 Month Income
Model Portfolio
£53,468
£2,373
Index Tracker
£51,459
£1,742
Relative to Index Tracker
£2,009
£631
Page 3
Model portfolio current holdings Rank Weight Name
Epic
Index
Sector
Price (ÂŁ)
Growth Yield
PE10
Consistency
Interest cover
7.0%
Cash
27
6.7%
Interserve PLC
IRV
FTSE Mid 250
Support Services
3.57
8.3%
5.3%
13.6
83%
8.6
25
5.3%
MITIE Group PLC
MTO
FTSE Mid 250
Support Services
2.83
15.3%
3.4%
19.8
98%
13.7
70
5.1%
UK Mail Group PLC
UKM
FTSE Small Cap Industrial Transportation
2.36
2.8%
7.7%
11.3
64%
160.8
19
5.1%
Vodafone Group PLC
VOD
FTSE 100
Mobile Telecommunications
1.83
11.1%
5.2%
13.1
88%
8.8
16
5.0%
Balfour Beatty PLC
BBY
FTSE Mid 250
Construction & Materials
2.82
12.6%
4.9%
11.7
88%
7.9
31
5.0%
Reckitt Benckiser Group PLC
RB.
FTSE 100
Household Goods & Home Construction
35.97
18.3%
3.5%
25.2
100%
71.3
14
4.7%
BAE Systems PLC
BA.
FTSE 100
Aerospace & Defense
3.15
12.3%
6.0%
10.8
86%
7.6
28
4.7%
Mears Group PLC
MER
FTSE Small Cap Support Services
2.79
19.7%
2.7%
18.6
98%
11.5
11
4.6%
SSE PLC
SSE
FTSE 100
Electricity
13.79
16.5%
5.8%
15.8
90%
7.9
15
4.5%
BHP Billiton PLC
BLT
FTSE 100
Mining
18.42
22.3%
3.9%
14.3
95%
35.3
5
4.4%
AstraZeneca PLC
AZN
FTSE 100
Pharmaceuticals & Biotechnology
29.61
17.3%
5.9%
11
90%
26.6
53
4.1%
BP PLC
BP.
FTSE 100
Oil & Gas Producers
4.42
2.9%
4.1%
9.4
71%
22.1
3
3.7%
Tullett Prebon PLC
TLPR
FTSE Mid 250
Financial Services
2.9
16.0%
5.7%
8.4
88%
9.9
20
3.5%
Tesco PLC
TSCO
FTSE 100
Food & Drug Retailers
3.4
9.7%
4.3%
14.5
98%
8.6
7
3.4%
Braemar Shipping Services PLC
BMS
FTSE Small Cap Industrial Transportation
3.68
10.8%
7.1%
9.3
86%
399.9
54
3.4%
Centrica PLC
CNA
FTSE 100
Gas; Water & Multiutilities
3.32
10.5%
4.6%
16.7
81%
17.9
21
3.3%
Brown (N) Group PLC
BWNG
FTSE Mid 250
General Retailers
2.69
12.3%
4.9%
14.3
88%
13.6
10
3.2%
JD Sports Fashion PLC
JD.
FTSE Mid 250
General Retailers
6.86
22.8%
3.7%
10.6
95%
73.7
1
3.0%
RSA Insurance Group PLC
RSA
FTSE 100
Nonlife Insurance
1.14
28.4%
8.1%
10.8
82%
51
2.7%
Aviva PLC
AV.
FTSE 100
Life Insurance
3.23
0.3%
8.0%
8.1
68%
13
2.7%
Go-Ahead Group (The) PLC
GOG
FTSE Mid 250
Travel & Leisure
12.95
11.3%
6.3%
9.7
83%
6.6
6
2.7%
ICAP PLC
IAP
FTSE 100
Financial Services
3.19
12.3%
6.9%
12.3
93%
9.6
9
2.2%
Chemring Group PLC
CHG
FTSE Mid 250
Aerospace & Defense
3.29
33.9%
4.5%
13.7
98%
6.2
Size Allocation
Large-cap, 51% Medium-cap, 35% Small-cap, 14%
Industry Allocation Health Care, 4.8% Financials, 13.0% Industrials, 39.8% Basic Materials, 4.8% Oil & Gas, 4.4% Consumer Services, 13.6% Utilities, 8.7% Consumer Goods, 5.4% Telecommunications, 5.5%
Page 4
Recent annual results 22nd August 2012 - BHP Billiton - BLT (joined portfolio 12th September 2011) “We are the world’s largest diversified natural resources company. Our objective is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.” - BHPBilliton.com
Revenue per share
Earnings per share
Dividend per share
+26.6%
-31.3%
+13%
Long-term growth
Dividend yield
3Yr interest cover
22.3%
3.9%
35.3
Quotes from the annual results Our strategy to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market remains a major point of differentiation, particularly in the current, more challenging economic environment. Weakness in commodity markets and industry wide cost pressure resulted in a 15 per cent decline in Underlying EBIT and a 21 per cent fall in Attributable profit (excluding exceptional items) in the 2012 financial year. Net operating cash flow of US$24.4 billion declined by 19 per cent while Underlying return on capital was 23 per cent. The value of the Company's diversified strategy was reflected in the Group's Underlying EBIT margin, which remained at a robust 39 per cent. BHP Billiton has an unrivalled portfolio of development options beyond those projects in execution and a significant number of these are embedded within our existing footprint. As our current expenditure commitments decline, future capital will be allocated to those options that maximise shareholder value, while also considering the balance between short and long-term returns. The Group's long stated priorities for capital management remain unchanged: firstly, to invest in high return growth opportunities throughout the economic cycle; secondly, to maintain a solid A credit rating and to grow our progressive dividend; and finally, to return excess capital to shareholders.
BLT Long-term results Earnings (per share)
Dividends (pe r share)
Turnover (£m)
300
50,000
P e 250 n c e 200
45,000 40,000 35,000
30,000 M
p e 150 r
i
25,000 l l
20,000 i
s 100 h a 50 r e
0 2004
Page 5
£
15,000 o n
10,000 5,000 0 2005
2006
2007
2008
2009
2010
2011
2012
Buying: Rio Tinto (RIO) Price
Index
Industry
2,715p Market Cap
FTSE 100 Revenue
Mining Pre-tax Profit
£38.3 billion
£39 billion
£14.7 billion
“Rio Tinto is a leading international business involved in each stage of metal and mineral production. We find, mine and process the Earth’s mineral resources that fulfil vital consumer needs and improve world living standards. We produce aluminium, copper, diamonds, coal, iron ore, uranium, gold and industrial minerals (borates, titanium dioxide, salt, talc)” - RioTinto.com
Overview In stark contrast to last month’s investment in Centrica, this month’s new holding for the model portfolio is a far less ‘defensive’ company. Although I call the investment strategy behind this newsletter ‘defensive’ value investing, it has a slightly different meaning to the way that most investors understand that word. Generally, defensive means a company that is in a non-cyclical businses, like Tesco or Reckitt Benckiser, where demand is not really affected by economic cycles. However, when I’m talking about defensive value investing I mean investing for ‘defensive’ investors, as defined by Ben Graham. For Graham, the defensive investor was a mainstream investor, interested in the safety of their investment first, with adequate returns a secondary consideration. This doesn’t mean that above average returns aren’t a goal, because they are. It just means that safety is more important and that high risks should be avoided - especially the risk of a permanent loss. As for Rio Tinto, this is a leading business in a cyclical industry. Profits are very high at the moment due to a commodities “super-cycle”, and it seems likely that at some point they will fall back from where they are today. However, cyclical businesses can still make very good investments if the investor avoids paying too much.
Initial screening You can see the summarised results of the stock screen in the table below. Long-term growth rate
Dividend yield
Valuation (PE10)
21.1%
3.3%
10.2
Consistency
3Yr Interest cover
Rank
83%
35.5
17 (out of 169)
The long-term growth rate is unlikely to be sustainable at over 20%. However, there are many factors which make it plausible that commodity prices will remain elevated relative to the previous decade for some time yet. What may be more interesting is that, although the yield is currently only 3.3%, there is substantial opportunity for the dividend to be raised. Earnings and free cash flows are currently much higher than dividend payments. Once the current period of high capital expenditure comes to an end there may be even more cash to pass on to shareholders. Although of course there are no guarantees of dividend increases. The current PE is extremely low at just over 5, which reflects the market’s view that current earnings are unsustainably high. However, the price is only 10 times the average earnings of the last decade, which is often a more reliable indicator of good value. Page 6
RIO Long-term results Earnings (per share)
Dividend (per share)
Turnover (£m)
600
45,000
P e 500 n c e 400
40,000 35,000 £ 30,000 M i l 20,000 l i 15,000 o n 10,000 s
25,000
p e 300 r s 200 h a 100 r e
0 2003
5,000 0 2004
2005
2006
2007
2008
2009
2010
2011
Investment checklist A high rank is good, but it is not enough. The following checklist is intended to route out any unsuitable investments. Would this company be the first, or at most the second holding from this particular industry? Rio Tinto would be the second global mining business in the portfolio, after BHP Billiton. This means that no more mining companies will be added after Rio Tinto. Does the business generate earnings across multiple geographic regions? Yes, Rio Tinto operates across the globe. Sales are distributed fairly evenly between North and South America, Europe, the Middle East, Africa, China and Australia. Does the business have diverse operations, including customers, suppliers and key staff? Yes, Rio has wide ranging operations, extracting and processing metals and minerals like gold, silver, diamond, aluminium and iron ore from facilities across the globe. In fact the 2010 annual report says “In the production and supply of metals and minerals, Rio Tinto is one of the world’s most diversified companies”. If there is an area of concentrated dependence I would say it is China. I don’t think it’s a particularly dangerous dependence though as China is unlikely to move away from using RIO as a supplier. Is the company in the leading group within its industry? Yes, Rio is one of the leading mining companies in the world and has a strategic goal to become the world’s leading mining and metals company. Has the company been highly successful in the past? Yes. Although we are currently in a commodities super-cycle, which means that recent high growth rates are unlikely to be sustainable longer-term, this is still a highly successful business with an excellent track record. Does the company have any competitive advantages? Are they low cost and durable? Although Rio Tinto may have some advantages in terms of scale, physical assets, staff and contacts, it doesn’t appear to have any low cost or durable advantages. This means that it has to work incredibly hard to survive and prosper, much like 99% of all companies. Does the company have a consistent operating history within the same industry? Yes. Rio began concentrating on mining in 1987, and over about 5 years sold off all of its non-mining operations and the focus on mining continues to this day.
Page 7
Has the company been free of any major crises during the last decade? If there were any, how were they solved and could they happen again? In the late 2000’s Rio fell into the fairly common trap of going on a debt fuelled acquisition spree during boom times. This is often a sign of narrow thinking by management, swept up in the excitement of record profits and a constant flow of good news. In Rio’s case, the company bought Alcan, the giant Canadian supplier of Aluminium, at the height of the last economic boom in 2007. The price paid was almost £24 billion and it was largely funded with debt - net debt went from about £1 billion in 2007 to £23 billion in 2007. The problem is that when the bust comes, earnings and cash flows fall but the debts still have to be paid. Rio was eventually able to raise almost £10 billion from shareholders in a rights issue in order to strengthen the balance sheet. Hopefully the current management have learned the relevant lessons, but you can never be sure. Certainly the most recent annual reports are much more cautious. They frequently mention the benefits of a strong balance sheet and how it will help the company to pick up distressed assets from others during the next crisis. Is the company free of obvious problems today which could materially impact its future prosperity? Value investors just have to get used to the idea that most good investments come with some degree of bad news. If a company is surrounded only by good news then the prices is rarely attractive. In Rio’s case there seem to be a couple of major reasons why the share price has fallen from around £45 in the first half of 2011 to less than £30 today. To some extent the fall is just part of a wider fall in the FTSE 100 which reflects the general market sentiment that things are not getting better in the world. More specifically to the mining sector, it seems that there are fears that the commodity boom may be coming to an end as commodity prices soften. BHP Billiton recently shelved tens of billions of pounds worth of development plans, and iron ore prices are dropping fast which will mean a big drop in next year’s profits. However, the end of the commodity boom is far from a sure thing, with Rio still convinced that it has years, and perhaps decades to run. And even if the boom does come to an end it doesn’t mean that the company is not attractively valued today. Does it seem likely that the history of success can continue into the future for many years to come? Rio Tinto operates in a primary industry which is at the foundation of civilisation. It seems unlikely that the mining industry will be going anywhere in the next century, at the very least. Within that industry, assuming the management can avoid loading up on debt again during the peak earnings phase, Rio has as good a chance of success as any other mining company in the world.
Summary Rio Tinto is one of the world’s leading mining companies, and one of its most diverse. I think it makes a fitting addition to the model portfolio alongside BHP Billiton and represents exactly the kind of company that I am looking for. I will be adding Rio to the portfolio in the days after this newsletter is published. The starting position will be the usual 1/30th of the current total value.
Higher ranking companies that were rejected Company
Reason for rejection
First Group
3Yr interest cover is only 2.9 which is low for any company no matter how defensive.
Vedanta Resources
3Yr interest cover is only 6.6, which is low for a company in a cyclical industry.
Carillion, Atkins (WS)
These companies operate in the design, engineering, construction and support services industries. The portfolio already owns several similar companies (MITIE, Interserve, and Balfour Beatty).
Page 8
FTSE 350 sorted by UKVI Rank The UKVI ranking system is designed so that the highest ranked shares have the best combination of high long-term growth rate, high earnings and dividend consistency, low valuation and high dividend yield. Rank Name
Epic Index
Sector
Price (ÂŁ)
Growth
Yield
PE10
Consistency
Interest cover
1
FirstGroup PLC
FGP
FTSE Mid 250
Travel & Leisure
2.45
10.2%
9.7%
6.8
93%
2.9
2
RSA Insurance Group PLC
RSA
FTSE 100
Nonlife Insurance
1.14
18.9%
8.1%
10.8
82%
3
Tullett Prebon PLC
TLPR
FTSE Mid 250
Financial Services
2.9
16.0%
5.7%
8.4
88%
9.9
4
Vedanta Resources PLC
VED
FTSE 100
Mining
8.61
27.7%
4.0%
8.9
90%
6.6
5
AstraZeneca PLC
AZN
FTSE 100
Pharmaceuticals & Biotechnology
29.61
17.3%
5.9%
11
90%
26.6
6
ICAP PLC
IAP
FTSE 100
Financial Services
3.19
12.3%
6.9%
12.3
93%
9.6
7
Braemar Shipping Services PLC
BMS
FTSE Small Cap
Industrial Transportation
3.68
10.8%
7.1%
9.3
86%
399.9
8
JD Sports Fashion PLC
JD.
FTSE Mid 250
General Retailers
6.86
22.8%
3.7%
10.6
95%
73.7
9
Chemring Group PLC
CHG
FTSE Mid 250
Aerospace & Defense
3.29
33.9%
4.5%
13.7
98%
6.2
10
SSE PLC
SSE
FTSE 100
Electricity
13.79
16.5%
5.8%
15.8
90%
7.9
11
Carillion PLC
CLLN
FTSE Mid 250
Support Services
2.76
13.5%
6.1%
11.1
86%
7.7
12
Go-Ahead Group (The) PLC
GOG
FTSE Mid 250
Travel & Leisure
12.95
11.3%
6.3%
9.7
83%
6.6
13
BAE Systems PLC
BA.
FTSE 100
Aerospace & Defense
3.15
12.3%
6.0%
10.8
86%
7.6
14
BHP Billiton PLC
BLT
FTSE 100
Mining
18.42
22.3%
3.9%
14.3
95%
35.3
15
Balfour Beatty PLC
BBY
FTSE Mid 250
Construction & Materials
2.82
12.6%
4.9%
11.7
88%
7.9
16
Atkins (W S) PLC
ATK
FTSE Mid 250
Support Services
6.6
11.5%
4.6%
10.1
88%
45.1
17
Rio Tinto PLC
RIO
FTSE 100
Mining
27.16
21.1%
3.3%
10.2
83%
35.5
18
Vodafone Group PLC
VOD
FTSE 100
Mobile Telecommunications
1.83
11.1%
5.2%
13.1
88%
8.8
19
Amlin PLC
AML
FTSE Mid 250
Nonlife Insurance
3.8
9.1%
6.1%
10.3
85%
20
Tesco PLC
TSCO
FTSE 100
Food & Drug Retailers
3.4
9.7%
4.3%
14.5
98%
8.6
21
Brown (N) Group PLC
BWNG FTSE Mid 250
General Retailers
2.69
12.3%
4.9%
14.3
88%
13.6
22
Man Group PLC
EMG
FTSE Mid 250
Financial Services
0.72
5.1%
14.4%
3.1
71%
6.6
23
Cranswick PLC
CWK
FTSE Mid 250
Food Producers
8.22
11.5%
3.5%
15.2
95%
42.7
24
Xstrata PLC
XTA
FTSE 100
Mining
9.01
21.2%
2.8%
9.6
86%
28.5
25
MITIE Group PLC
MTO
FTSE Mid 250
Support Services
2.83
15.3%
3.4%
19.8
98%
13.7
26
Interserve PLC
IRV
FTSE Mid 250
Support Services
3.57
8.3%
5.3%
13.6
83%
8.6
27
Homeserve PLC
HSV
FTSE Mid 250
Support Services
2.16
13.1%
5.2%
13.1
79%
52
28
Mears Group PLC
MER
FTSE Small Cap
Support Services
2.79
19.7%
2.7%
18.6
98%
11.5
29
Imperial Tobacco Group PLC
IMT
FTSE 100
Tobacco
24.74
20.1%
3.8%
22.1
88%
3.7
30
Greene King PLC
GNK
FTSE Mid 250
Travel & Leisure
5.58
6.8%
4.4%
11.9
88%
2.6
31
Marston's PLC
MARS FTSE Mid 250
Travel & Leisure
1.1
0.3%
5.3%
7.7
79%
2.1
32
Reckitt Benckiser Group PLC
RB.
FTSE 100
Household Goods & Home Construction
35.97
18.3%
3.5%
25.2
100%
71.3
33
Restaurant Group (The) PLC
RTN
FTSE Mid 250
Travel & Leisure
3.22
15.0%
3.3%
22
95%
32.2
34
Cable & Wireless Communications PLC CWC
FTSE Mid 250
Fixed Line Telecommunications
0.34
7.6%
15.1%
11
67%
3.6
35
Intermediate Capital Group PLC
ICP
FTSE Mid 250
Financial Services
2.81
-0.1%
6.8%
6.4
74%
5.2
36
Cobham PLC
COB
FTSE Mid 250
Aerospace & Defense
2.17
13.3%
3.7%
17.5
88%
7
37
Brewin Dolphin Holdings PLC
BRW
FTSE Mid 250
Financial Services
1.47
11.4%
4.8%
16.9
76%
666.2
38
Morrison (Wm) Supermarkets PLC
MRW
FTSE 100
Food & Drug Retailers
2.81
16.0%
3.8%
18.7
86%
22.1
39
Barclays PLC
BARC
FTSE 100
Banks
1.84
-10.4%
3.3%
5
74%
40
ITE Group PLC
ITE
FTSE Mid 250
Media
1.99
14.7%
3.1%
23.5
95%
31.7
41
CRH PLC
CRH
FTSE 100
Construction & Materials
11.05
7.3%
4.8%
10.7
76%
3.3
42
National Grid PLC
NG.
FTSE 100
Gas; Water & Multiutilities
6.93
9.3%
5.7%
14.1
76%
3.9
43
Investec PLC
INVP
FTSE Mid 250
Financial Services
3.74
2.1%
4.5%
9.7
76%
44
Greggs PLC
GRG
FTSE Mid 250
Food & Drug Retailers
4.91
7.5%
3.9%
16
93%
45
London Stock Exchange Group PLC
LSE
FTSE Mid 250
Financial Services
9.85
17.4%
2.9%
19.4
86%
7.5
46
Marks & Spencer Group PLC
MKS
FTSE 100
General Retailers
3.58
4.9%
4.7%
10.8
74%
6.6
47
Pennon Group PLC
PNN
FTSE 100
Gas; Water & Multiutilities
7.44
11.8%
3.6%
24.8
95%
3.3
48
Hays PLC
HAS
FTSE Mid 250
Support Services
0.7
3.5%
8.3%
9.3
67%
16.9
49
Close Brothers Group PLC
CBG
FTSE Mid 250
Financial Services
7.75
1.6%
5.2%
13.1
82%
50
Sage Group (The) PLC
SGE
FTSE 100
Software & Computer Services
2.95
15.7%
3.3%
22.8
93%
Page 9
23.6
Rank Name
Epic
Index
Sector
Price (ÂŁ)
Growth
Yield
PE10
Consistency
Interest cover
51
BP PLC
BP.
FTSE 100
Oil & Gas Producers
4.42
2.9%
4.1%
9.4
71%
22.1
52
Centrica PLC
CNA
FTSE 100
Gas; Water & Multiutilities
3.32
10.5%
4.6%
16.7
81%
17.9
53
Segro PLC
SGRO
FTSE Mid 250
Real Estate Investment Trusts
2.32
-8.6%
6.4%
3.6
69%
1.5
54
Aviva PLC
AV.
FTSE 100
Life Insurance
3.23
0.2%
8.0%
8.1
68%
55
WPP Group PLC
WPP
FTSE 100
Media
8.19
12.7%
3.0%
19.9
95%
3.9
56
Paragon Group of Companies (The) PLC
PAG
FTSE Mid 250
Financial Services
1.85
-11.3%
2.2%
2.5
71%
2
57
Capita Group (The) PLC
CPI
FTSE 100
Support Services
7.22
17.2%
3.0%
26.6
95%
10.4
58
GlaxoSmithKline PLC
GSK
FTSE 100
Pharmaceuticals & Biotechnology
14.4
5.0%
4.9%
15.9
83%
10.5
59
HSBC Holdings PLC
HSBA
FTSE 100
Banks
5.48
-3.2%
4.7%
10.4
74%
60
Dairy Crest Group PLC
DCG
FTSE Mid 250
Food Producers
3.41
1.3%
6.0%
8.3
64%
3.5
61
Kier Group PLC
KIE
FTSE Mid 250
Construction & Materials
12.99
8.1%
4.9%
14
79%
13.5
62
Domino Printing Sciences PLC
DNO
FTSE Mid 250
Electronic & Electrical Equipment
5.68
12.8%
3.3%
24.9
95%
159.7
63
IMI PLC
IMI
FTSE 100
Industrial Engineering
8.42
9.6%
3.6%
19.2
88%
15.4
64
Fidessa Group PLC
FDSA
FTSE Mid 250
Software & Computer Services
14.23
23.0%
2.6%
32.5
98%
65
British American Tobacco PLC
BATS
FTSE 100
Tobacco
33.25
12.5%
3.8%
27
93%
10
66
Spirax-Sarco Engineering PLC
SPX
FTSE Mid 250
Industrial Engineering
19.31
12.7%
2.5%
26.6
100%
86.5
67
Stagecoach Group PLC
SGC
FTSE Mid 250
Travel & Leisure
2.88
13.7%
2.7%
18.5
83%
6.3
68
UK Mail Group PLC
UKM
FTSE Small Cap Industrial Transportation
2.36
2.8%
7.7%
11.3
64%
160.8
69
Synergy Health PLC
SYR
FTSE Mid 250
Health Care Equipment & Services
8.93
20.8%
2.0%
29
98%
5.7
70
Hammerson PLC
HMSO
FTSE 100
Real Estate Investment Trusts
4.53
-3.6%
3.7%
6.5
74%
2.2
71
Standard Chartered PLC
STAN
FTSE 100
Banks
14.01
6.4%
3.4%
15.6
85%
72
Schroders PLC
SDR
FTSE 100
Financial Services
14.07
10.9%
2.8%
20.9
88%
73
FTSE 100
57
4.7%
3.6%
13.3
79%
74
Ladbrokes PLC
LAD
FTSE Mid 250
Travel & Leisure
1.7
-6.3%
4.6%
7.5
64%
75
British Sky Broadcasting Group PLC
BSY
FTSE 100
Media
7.6
11.0%
3.3%
24.4
90%
76
RPC Group PLC
RPC
FTSE Mid 250
General Industrials
4.3
10.8%
3.3%
19.3
88%
6.3
77
Ultra Electronics Holdings PLC
ULE
FTSE Mid 250
Aerospace & Defense
15.27
15.5%
2.5%
25
90%
31.6
78
Serco Group PLC
SRP
FTSE 100
Support Services
5.64
18.6%
1.5%
29.1
100%
6.4
79
Legal & General Group PLC
LGEN
FTSE 100
Life Insurance
1.28
2.5%
5.0%
13.5
74%
80
Premier Farnell PLC
PFL
FTSE Mid 250
Support Services
1.9
3.9%
5.5%
14.9
69%
7.4
81
RPS Group PLC
RPS
FTSE Mid 250
Support Services
2.4
14.1%
2.3%
19.3
86%
19.7
82
Sainsbury (J) PLC
SBRY
FTSE 100
Food & Drug Retailers
3.33
14.7%
4.8%
20.3
60%
7
83
Domino's Pizza UK & IRL PLC
DOM
FTSE Mid 250
Travel & Leisure
5.37
26.6%
2.3%
57.5
100%
64.9
84
Meggitt PLC
MGGT
FTSE 100
Aerospace & Defense
3.94
11.4%
2.7%
22
86%
8.1
85
BT Group PLC
BT.A
FTSE 100
Fixed Line Telecommunications
2.19
-1.6%
3.8%
12.7
71%
4.2
86
Weir Group PLC
WEIR
FTSE 100
Industrial Engineering
16.01
18.8%
2.1%
30.5
95%
24.3
87
British Land Co PLC
BLND
FTSE 100
Real Estate Investment Trusts
5.36
-6.4%
4.9%
5.2
64%
3.6
88
Babcock International Group PLC
BAB
FTSE 100
Support Services
9.15
23.0%
2.5%
32.9
90%
4.8
89
BG Group PLC
BG.
FTSE 100
Oil & Gas Producers
12.94
18.9%
1.1%
21.7
86%
39.1
90
Millennium & Copthorne Hotels PLC
MLC
FTSE Mid 250
Travel & Leisure
4.8
12.4%
2.6%
18.2
79%
14.5
91
Aberdeen Asset Management PLC
ADN
FTSE 100
Financial Services
2.76
20.6%
3.3%
35.4
86%
18.5
92
Land Securities Group PLC
LAND
FTSE 100
Real Estate Investment Trusts
7.88
-12.4%
3.7%
7.1
62%
2.7
93
Prudential PLC
PRU
FTSE 100
Life Insurance
7.84
6.8%
3.2%
23.2
91%
94
Rexam PLC
REX
FTSE 100
General Industrials
4.24
0.4%
3.4%
14
76%
4.1
95
Rotork PLC
ROR
FTSE Mid 250
Industrial Engineering
21.57
17.5%
1.7%
41.9
100%
859.8
96
Galliford Try PLC
GFRD
FTSE Mid 250
Construction & Materials
6.21
2.1%
2.6%
11.1
76%
9.1
97
Barr (A G) PLC
BAG
FTSE Mid 250
Beverages
4.28
10.9%
2.2%
28.9
100%
49.2
98
Telecom plus PLC
TEP
FTSE Mid 250
Fixed Line Telecommunications
8.14
23.2%
3.3%
45.3
83%
193.1
99
Electrocomponents PLC
ECM
FTSE Mid 250
Support Services
2.24
0.1%
5.3%
14.9
67%
14.5
100
Stobart Group Ltd
STOB
FTSE Mid 250
Industrial Transportation
1.13
-9.0%
5.3%
7.5
57%
7.1
101
Savills PLC
SVS
FTSE Mid 250
Real Estate Investment & Services
3.94
3.8%
3.4%
14.4
76%
28.8
102
Victrex PLC
VCT
FTSE Mid 250
Chemicals
13.12
15.0%
2.5%
31.6
95%
635.1
103
Aggreko PLC
AGK
FTSE 100
Support Services
23.05
26.7%
0.9%
56.6
98%
14.2
104
Diploma PLC
DPLM
FTSE Mid 250
Support Services
4.24
14.2%
2.8%
34.4
95%
45.7
105
PZ Cussons PLC
PZC
FTSE Mid 250
Personal Goods
3.05
10.6%
2.2%
26.6
95%
27.6
106
Computacenter PLC
CCC
FTSE Mid 250
Software & Computer Services
3.7
6.8%
4.1%
15.6
74%
31.2
107
Fenner PLC
FENR
FTSE Mid 250
Industrial Engineering
3.5
12.1%
2.3%
26.8
88%
4.6
108
Intertek Group PLC
ITRK
FTSE 100
Support Services
27.45
18.1%
1.2%
48.2
100%
10.2
109
Antofagasta PLC
ANTO
FTSE 100
Mining
10.94
20.3%
1.2%
21.5
81%
27
110
Rathbone Brothers PLC
RAT
FTSE Mid 250
Financial Services
12.65
3.7%
3.6%
21.6
85%
Page 10
11.5
Rank
Name
Epic
Index
Sector
Price (ÂŁ)
Growth
Yield
PE10
Consistency
Interest cover
111
Croda International PLC
CRDA
FTSE 100
Chemicals
23.54
22.4%
2.3%
47.3
93%
18.4
112
Bunzl PLC
BNZL
FTSE 100
Support Services
11.16
9.4%
2.4%
26.9
95%
8
113
Johnson Matthey PLC
JMAT
FTSE 100
Chemicals
23.58
10.7%
2.4%
25.3
90%
10.2
114
Rolls-Royce Group PLC
RR.
FTSE 100
Aerospace & Defense
8.21
16.0%
2.1%
29.4
86%
32.1
115
Halma PLC
HLMA
FTSE Mid 250
Electronic & Electrical Equipment
4.09
9.2%
2.4%
29.6
95%
63.7
116
Pearson PLC
PSON
FTSE 100
Media
12.01
8.4%
3.5%
25.9
83%
10.8
117
Smith & Nephew PLC
SN.
FTSE 100
Health Care Equipment & Services
6.69
12.0%
1.6%
21.4
88%
74.2
118
Dechra Pharmaceuticals PLC
DPH
FTSE Mid 250
Pharmaceuticals & Biotechnology
5.05
12.4%
2.2%
34.4
98%
5.5
119
Next PLC
NXT
FTSE 100
General Retailers
36.18
8.9%
2.5%
22.1
90%
21
120
Tate & Lyle PLC
TATE
FTSE 100
Food Producers
6.55
2.1%
3.8%
15.7
71%
10.9
121
Michael Page International PLC
MPI
FTSE Mid 250
Support Services
3.5
9.7%
2.9%
23
81%
60.1
122
AVEVA Group PLC
AVV
FTSE Mid 250
Software & Computer Services
17.82
32.3%
1.2%
47.9
90%
2433.2
123
Old Mutual PLC
OML
FTSE 100
Life Insurance
1.65
-8.1%
3.5%
11.5
71%
124
Associated British Foods PLC
ABF
FTSE 100
Food Producers
13.32
7.8%
1.9%
25.3
98%
8.3
125
Burberry Group PLC
BRBY
FTSE 100
Personal Goods
13.28
16.2%
1.9%
39
93%
84.4
126
Spectris PLC
SXS
FTSE Mid 250
Electronic & Electrical Equipment
16.79
12.4%
2.0%
30.1
93%
12.5
127
Reed Elsevier PLC
REL
FTSE 100
Media
5.94
6.5%
3.6%
20.7
74%
4.3
128
Bodycote PLC
BOY
FTSE Mid 250
Industrial Engineering
3.42
4.9%
3.2%
17.8
76%
40.5
129
Shanks Group PLC
SKS
FTSE Mid 250
Support Services
0.89
-0.6%
3.9%
13.1
60%
3.1
130
BBA Aviation PLC
BBA
FTSE Mid 250
Industrial Transportation
1.87
-1.8%
4.6%
11.6
55%
5.5
131
Berendsen PLC
BRSN
FTSE Mid 250
Support Services
5.35
3.9%
4.4%
17
64%
3.4
132
Law Debenture Corporation (The) PLC LWDB
FTSE Mid 250
Equity Investment Instruments
4
5.7%
3.4%
32.9
88%
133
William Hill PLC
WMH
FTSE Mid 250
Travel & Leisure
2.98
-10.2%
3.2%
11.8
64%
8.1
134
SABMiller PLC
SAB
FTSE 100
Beverages
27.99
14.1%
2.1%
36.7
90%
6
135
ARM Holdings PLC
ARM
FTSE 100
Technology Hardware & Equipment
5.72
20.5%
0.6%
151.1
93%
136
Ted Baker PLC
TED
FTSE Mid 250
General Retailers
10.08
9.4%
2.3%
30.2
93%
113.4
137
Provident Financial PLC
PFG
FTSE Mid 250
Financial Services
13.1
0.7%
5.3%
19.8
67%
2.9
138
De La Rue PLC
DLAR
FTSE Mid 250
Support Services
10.5
8.8%
4.0%
24.6
71%
19.1
139
Bellway PLC
BWY
FTSE Mid 250
Household Goods & Home Construction
8.69
-15.9%
1.4%
11
69%
3.8
140
Euromoney Institutional Investor PLC
ERM
FTSE Mid 250
Media
7.58
5.8%
2.5%
22.8
79%
9.2
141
Senior PLC
SNR
FTSE Mid 250
Aerospace & Defense
1.97
13.3%
1.9%
27.8
81%
8
142
United Utilities Group PLC
UU.
FTSE 100
Gas; Water & Multiutilities
7.13
-3.7%
4.5%
16.1
60%
2.5
143
Derwent London PLC
DLN
FTSE Mid 250
Real Estate Investment Trusts
19.05
6.9%
1.6%
17.1
83%
2.2
144
Smith (DS) PLC
SMDS
FTSE Mid 250
General Industrials
1.61
-0.6%
3.7%
17.8
71%
3.8
145
Smiths Group PLC
SMIN
FTSE 100
General Industrials
10.41
3.0%
3.5%
17.1
64%
7.2
146
Laird PLC
LRD
FTSE Mid 250
Electronic & Electrical Equipment
2.23
-6.7%
3.6%
14.4
62%
5.4
147
John Wood Group PLC
WG.
FTSE Mid 250
Oil Equipment; Services & Distribution
8.09
17.9%
1.1%
39.2
83%
19.9
148
Tullow Oil PLC
TLW
FTSE 100
Oil & Gas Producers
13.47
21.8%
0.9%
64.6
83%
10.2
149
Devro PLC
DVO
FTSE Mid 250
Food Producers
3.09
9.4%
2.6%
28.6
83%
37.3
150
Unilever PLC
ULVR
FTSE 100
Food Producers
22.65
3.8%
3.4%
18.6
69%
13.1
151
Jardine Lloyd Thompson Group PLC
JLT
FTSE Mid 250
Nonlife Insurance
7.67
5.3%
3.1%
23.5
69%
20.1
152
Diageo PLC
DGE
FTSE 100
Beverages
17.43
6.4%
2.5%
28.5
81%
153
Compass Group PLC
CPG
FTSE 100
Travel & Leisure
7.13
9.3%
2.7%
32
83%
154
St James's Place PLC
STJ
FTSE Mid 250
Life Insurance
3.4
8.1%
2.4%
28.4
88%
155
Genus PLC
GNS
FTSE Mid 250
Pharmaceuticals & Biotechnology
13.34
10.7%
1.0%
46.8
95%
11
156
Severn Trent PLC
SVT
FTSE 100
Gas; Water & Multiutilities
17.56
3.9%
4.0%
22.7
62%
3
157
Kingfisher PLC
KGF
FTSE 100
General Retailers
2.76
0.5%
3.2%
15.6
60%
23.4
158
Caledonia Investments PLC
CLDN
FTSE Mid 250
Equity Investment Instruments
14.24
0.6%
3.0%
20.1
71%
159
Renishaw PLC
RSW
FTSE Mid 250
Electronic & Electrical Equipment
15.5
10.3%
2.5%
35.3
83%
219.6
160
Daejan Holdings PLC
DJAN
FTSE Mid 250
Real Estate Investment & Services
30.45
0.3%
2.5%
22.3
71%
6.4
161
Whitbread PLC
WTB
FTSE 100
Travel & Leisure
21.42
9.0%
2.4%
27.2
74%
10
162
AMEC PLC
AMEC
FTSE 100
Oil Equipment; Services & Distribution
10.88
9.5%
2.8%
30.4
74%
163
Great Portland Estates PLC
GPOR
FTSE Mid 250
Real Estate Investment Trusts
4.37
-5.9%
1.9%
13.4
60%
164
Templeton Emerging Markets Inv Tr PLC
TEM
FTSE Mid 250
Equity Investment Instruments
5.34
6.5%
1.1%
112.3
88%
165
InterContinental Hotels Group PLC
IHG
FTSE 100
Travel & Leisure
16
6.5%
2.2%
26.9
67%
8
166
Hunting PLC
HTG
FTSE Mid 250
Oil Equipment; Services & Distribution
7.79
4.0%
1.9%
34.3
74%
15.6
167
Oxford Instruments PLC
OXIG
FTSE Mid 250
Electronic & Electrical Equipment
13.04
13.2%
0.8%
75.5
60%
35.9
168
Aegis Group PLC
AGS
FTSE Mid 250
Media
2.38
0.4%
1.3%
34.7
71%
3.5
169
Dialight PLC
DIA
FTSE Mid 250
Electronic & Electrical Equipment
11.64
4.8%
0.9%
82.4
52%
344.9
Page 11
15.8
3
FTSE 350 sorted by company name If you want to know how a particular company’s shares rank using the UK Value Investor system, just look them up in the table below.
Name
Epic
Index
Sector
Price (£)
Growth
Yield
PE10
Consistency
Interest cover
91
Aberdeen Asset Management PLC
ADN
FTSE 100
Financial Services
2.76
20.6%
3.3%
35.4
86%
18.5
168
Aegis Group PLC
AGS
FTSE Mid 250 Media
2.38
0.4%
1.3%
34.7
71%
3.5
103
Aggreko PLC
AGK
FTSE 100
Support Services
23.05
26.7%
0.9%
56.6
98%
14.2
162
AMEC PLC
AMEC
FTSE 100
Oil Equipment; Services & Distribution
10.88
9.5%
2.8%
30.4
74%
19
Amlin PLC
AML
FTSE Mid 250 Nonlife Insurance
3.8
9.1%
6.1%
10.3
85%
109
Antofagasta PLC
ANTO
FTSE 100
Mining
10.94
20.3%
1.2%
21.5
81%
135
ARM Holdings PLC
ARM
FTSE 100
Technology Hardware & Equipment
5.72
20.5%
0.6%
151.1
93%
124
Associated British Foods PLC
ABF
FTSE 100
Food Producers
13.32
7.8%
1.9%
25.3
98%
8.3
5
AstraZeneca PLC
AZN
FTSE 100
Pharmaceuticals & Biotechnology
29.61
17.3%
5.9%
11
90%
26.6
16
Atkins (W S) PLC
ATK
FTSE Mid 250 Support Services
6.6
11.5%
4.6%
10.1
88%
45.1
122
AVEVA Group PLC
AVV
FTSE Mid 250 Software & Computer Services
17.82
32.3%
1.2%
47.9
90%
2433.2
54
Aviva PLC
AV.
FTSE 100
Life Insurance
3.23
0.2%
8.0%
8.1
68%
88
Babcock International Group PLC
BAB
FTSE 100
Support Services
9.15
23.0%
2.5%
32.9
90%
4.8
13
BAE Systems PLC
BA.
FTSE 100
Aerospace & Defense
3.15
12.3%
6.0%
10.8
86%
7.6
15
Balfour Beatty PLC
BBY
FTSE Mid 250 Construction & Materials
2.82
12.6%
4.9%
11.7
88%
7.9
39
Barclays PLC
BARC
FTSE 100
1.84
-10.4%
3.3%
5
74%
97
Barr (A G) PLC
BAG
FTSE Mid 250 Beverages
4.28
10.9%
2.2%
28.9
100%
49.2
130
BBA Aviation PLC
BBA
FTSE Mid 250 Industrial Transportation
1.87
-1.8%
4.6%
11.6
55%
5.5
139
Bellway PLC
BWY
FTSE Mid 250 Household Goods & Home Construction
8.69
-15.9%
1.4%
11
69%
3.8
131
Berendsen PLC
BRSN
FTSE Mid 250 Support Services
5.35
3.9%
4.4%
17
64%
3.4
89
BG Group PLC
BG.
FTSE 100
Oil & Gas Producers
12.94
18.9%
1.1%
21.7
86%
39.1
14
BHP Billiton PLC
BLT
FTSE 100
Mining
18.42
22.3%
3.9%
14.3
95%
35.3
128
Bodycote PLC
BOY
FTSE Mid 250 Industrial Engineering
3.42
4.9%
3.2%
17.8
76%
40.5
51
BP PLC
BP.
FTSE 100
Oil & Gas Producers
4.42
2.9%
4.1%
9.4
71%
22.1
7
Braemar Shipping Services PLC
BMS
FTSE Small Cap
Industrial Transportation
3.68
10.8%
7.1%
9.3
86%
399.9
37
Brewin Dolphin Holdings PLC
BRW
FTSE Mid 250 Financial Services
1.47
11.4%
4.8%
16.9
76%
666.2
65
British American Tobacco PLC
BATS
FTSE 100
Tobacco
33.25
12.5%
3.8%
27
93%
10
87
British Land Co PLC
BLND
FTSE 100
Real Estate Investment Trusts
5.36
-6.4%
4.9%
5.2
64%
3.6
75
British Sky Broadcasting Group PLC BSY
FTSE 100
Media
7.6
11.0%
3.3%
24.4
90%
21
Brown (N) Group PLC
BWNG
FTSE Mid 250 General Retailers
2.69
12.3%
4.9%
14.3
88%
13.6
85
BT Group PLC
BT.A
FTSE 100
Fixed Line Telecommunications
2.19
-1.6%
3.8%
12.7
71%
4.2
112
Bunzl PLC
BNZL
FTSE 100
Support Services
11.16
9.4%
2.4%
26.9
95%
8
125
Burberry Group PLC
BRBY
FTSE 100
Personal Goods
13.28
16.2%
1.9%
39
93%
84.4
34
Cable & Wireless Communications PLC
CWC
FTSE Mid 250 Fixed Line Telecommunications
0.34
7.6%
15.1%
11
67%
3.6
158
Caledonia Investments PLC
CLDN
FTSE Mid 250 Equity Investment Instruments
14.24
0.6%
3.0%
20.1
71%
57
Capita Group (The) PLC
CPI
FTSE 100
Support Services
7.22
17.2%
3.0%
26.6
95%
10.4
11
Carillion PLC
CLLN
FTSE Mid 250 Support Services
2.76
13.5%
6.1%
11.1
86%
7.7
52
Centrica PLC
CNA
FTSE 100
3.32
10.5%
4.6%
16.7
81%
17.9
9
Chemring Group PLC
CHG
FTSE Mid 250 Aerospace & Defense
3.29
33.9%
4.5%
13.7
98%
6.2
49
Close Brothers Group PLC
CBG
FTSE Mid 250 Financial Services
7.75
1.6%
5.2%
13.1
82%
36
Cobham PLC
COB
FTSE Mid 250 Aerospace & Defense
2.17
13.3%
3.7%
17.5
88%
7
153
Compass Group PLC
CPG
FTSE 100
7.13
9.3%
2.7%
32
83%
15.8
106
Computacenter PLC
CCC
FTSE Mid 250 Software & Computer Services
3.7
6.8%
4.1%
15.6
74%
31.2
23
Cranswick PLC
CWK
FTSE Mid 250 Food Producers
8.22
11.5%
3.5%
15.2
95%
42.7
41
CRH PLC
CRH
FTSE 100
Construction & Materials
11.05
7.3%
4.8%
10.7
76%
3.3
111
Croda International PLC
CRDA
FTSE 100
Chemicals
23.54
22.4%
2.3%
47.3
93%
18.4
160
Daejan Holdings PLC
DJAN
FTSE Mid 250 Real Estate Investment & Services
30.45
0.3%
2.5%
22.3
71%
6.4
60
Dairy Crest Group PLC
DCG
FTSE Mid 250 Food Producers
3.41
1.3%
6.0%
8.3
64%
3.5
138
De La Rue PLC
DLAR
FTSE Mid 250 Support Services
10.5
8.8%
4.0%
24.6
71%
19.1
118
Dechra Pharmaceuticals PLC
DPH
FTSE Mid 250 Pharmaceuticals & Biotechnology
5.05
12.4%
2.2%
34.4
98%
5.5
88
COOKSON GROUP
CKSN
FTSE250
566.3
-1.5%
4.0%
11
10.11
Rank
Page 12
Banks
Gas; Water & Multiutilities
Travel & Leisure
GENERAL INDUSTRIALS
27
Rank Name
Epic
Index
Sector
Price (ÂŁ)
Growth
Yield
PE10 Consistency
Interest cover
143
Derwent London PLC
DLN
FTSE Mid 250
Real Estate Investment Trusts
19.05
6.9%
1.6%
17.1
83%
2.2
149
Devro PLC
DVO
FTSE Mid 250
Food Producers
3.09
9.4%
2.6%
28.6
83%
37.3
152
Diageo PLC
DGE
FTSE 100
Beverages
17.43
6.4%
2.5%
28.5
81%
169
Dialight PLC
DIA
FTSE Mid 250
Electronic & Electrical Equipment
11.64
4.8%
0.9%
82.4
52%
344.9
104
Diploma PLC
DPLM
FTSE Mid 250
Support Services
4.24
14.2%
2.8%
34.4
95%
45.7
62
Domino Printing Sciences PLC
DNO
FTSE Mid 250
Electronic & Electrical Equipment
5.68
12.8%
3.3%
24.9
95%
159.7
83
Domino's Pizza UK & IRL PLC
DOM
FTSE Mid 250
Travel & Leisure
5.37
26.6%
2.3%
57.5
100%
64.9
99
Electrocomponents PLC
ECM
FTSE Mid 250
Support Services
2.24
0.1%
5.3%
14.9
67%
14.5
140
Euromoney Institutional Investor PLC
ERM
FTSE Mid 250
Media
7.58
5.8%
2.5%
22.8
79%
9.2 4.6
107
Fenner PLC
FENR
FTSE Mid 250
Industrial Engineering
3.5
12.1%
2.3%
26.8
88%
64
Fidessa Group PLC
FDSA
FTSE Mid 250
Software & Computer Services
14.23
23.0%
2.6%
32.5
98%
1
FirstGroup PLC
FGP
FTSE Mid 250
Travel & Leisure
73
FTSE 100
2.45
10.2%
9.7%
6.8
93%
57
4.7%
3.6%
13.3
79%
2.9
96
Galliford Try PLC
GFRD
FTSE Mid 250
Construction & Materials
6.21
2.1%
2.6%
11.1
76%
9.1
155
Genus PLC
GNS
FTSE Mid 250
Pharmaceuticals & Biotechnology
13.34
10.7%
1.0%
46.8
95%
11
58
GlaxoSmithKline PLC
GSK
FTSE 100
Pharmaceuticals & Biotechnology
14.4
5.0%
4.9%
15.9
83%
10.5
12
Go-Ahead Group (The) PLC
GOG
FTSE Mid 250
Travel & Leisure
12.95
11.3%
6.3%
9.7
83%
6.6
163
Great Portland Estates PLC
GPOR
FTSE Mid 250
Real Estate Investment Trusts
4.37
-5.9%
1.9%
13.4
60%
3
30
Greene King PLC
GNK
FTSE Mid 250
Travel & Leisure
5.58
6.8%
4.4%
11.9
88%
2.6
44
Greggs PLC
GRG
FTSE Mid 250
Food & Drug Retailers
4.91
7.5%
3.9%
16
93%
115
Halma PLC
HLMA
FTSE Mid 250
Electronic & Electrical Equipment
4.09
9.2%
2.4%
29.6
95%
63.7
70
Hammerson PLC
HMSO
FTSE 100
Real Estate Investment Trusts
4.53
-3.6%
3.7%
6.5
74%
2.2
48
Hays PLC
HAS
FTSE Mid 250
Support Services
0.7
3.5%
8.3%
9.3
67%
16.9
27
Homeserve PLC
HSV
FTSE Mid 250
Support Services
2.16
13.1%
5.2%
13.1
79%
52
59
HSBC Holdings PLC
HSBA
FTSE 100
Banks
5.48
-3.2%
4.7%
10.4
74%
166
Hunting PLC
HTG
FTSE Mid 250
Oil Equipment; Services & Distribution
7.79
4.0%
1.9%
34.3
74%
15.6
6
ICAP PLC
IAP
FTSE 100
Financial Services
3.19
12.3%
6.9%
12.3
93%
9.6
63
IMI PLC
IMI
FTSE 100
Industrial Engineering
8.42
9.6%
3.6%
19.2
88%
15.4
29
Imperial Tobacco Group PLC
IMT
FTSE 100
Tobacco
24.74
20.1%
3.8%
22.1
88%
3.7
165
InterContinental Hotels Group PLC
IHG
FTSE 100
Travel & Leisure
16
6.5%
2.2%
26.9
67%
8
35
Intermediate Capital Group PLC
ICP
FTSE Mid 250
Financial Services
2.81
-0.1%
6.8%
6.4
74%
5.2
26
Interserve PLC
IRV
FTSE Mid 250
Support Services
3.57
8.3%
5.3%
13.6
83%
8.6
108
Intertek Group PLC
ITRK
FTSE 100
Support Services
27.45
18.1%
1.2%
48.2
100%
10.2
43
Investec PLC
INVP
FTSE Mid 250
Financial Services
3.74
2.1%
4.5%
9.7
76%
40
ITE Group PLC
ITE
FTSE Mid 250
Media
1.99
14.7%
3.1%
23.5
95%
31.7
151
Jardine Lloyd Thompson Group PLC
JLT
FTSE Mid 250
Nonlife Insurance
7.67
5.3%
3.1%
23.5
69%
20.1
8
JD Sports Fashion PLC
JD.
FTSE Mid 250
General Retailers
6.86
22.8%
3.7%
10.6
95%
73.7
147
John Wood Group PLC
WG.
FTSE Mid 250
Oil Equipment; Services & Distribution
8.09
17.9%
1.1%
39.2
83%
19.9
113
Johnson Matthey PLC
JMAT
FTSE 100
Chemicals
23.58
10.7%
2.4%
25.3
90%
10.2
61
Kier Group PLC
KIE
FTSE Mid 250
Construction & Materials
12.99
8.1%
4.9%
14
79%
13.5
157
Kingfisher PLC
KGF
FTSE 100
General Retailers
2.76
0.5%
3.2%
15.6
60%
23.4
74
Ladbrokes PLC
LAD
FTSE Mid 250
Travel & Leisure
1.7
-6.3%
4.6%
7.5
64%
11.5
146
Laird PLC
LRD
FTSE Mid 250
Electronic & Electrical Equipment
2.23
-6.7%
3.6%
14.4
62%
5.4
92
Land Securities Group PLC
LAND
FTSE 100
Real Estate Investment Trusts
7.88
-12.4%
3.7%
7.1
62%
2.7
132
Law Debenture Corporation (The) PLC
LWDB
FTSE Mid 250
Equity Investment Instruments
4
5.7%
3.4%
32.9
88%
79
Legal & General Group PLC
LGEN
FTSE 100
Life Insurance
1.28
2.5%
5.0%
13.5
74%
45
London Stock Exchange Group PLC
LSE
FTSE Mid 250
Financial Services
9.85
17.4%
2.9%
19.4
86%
7.5
22
Man Group PLC
EMG
FTSE Mid 250
Financial Services
0.72
5.1%
14.4%
3.1
71%
6.6
46
Marks & Spencer Group PLC
MKS
FTSE 100
General Retailers
3.58
4.9%
4.7%
10.8
74%
6.6
31
Marston's PLC
MARS
FTSE Mid 250
Travel & Leisure
1.1
0.3%
5.3%
7.7
79%
2.1
28
Mears Group PLC
MER
FTSE Small Cap
Support Services
2.79
19.7%
2.7%
18.6
98%
11.5
84
Meggitt PLC
MGGT
FTSE 100
Aerospace & Defense
3.94
11.4%
2.7%
22
86%
8.1
121
Michael Page International PLC
MPI
FTSE Mid 250
Support Services
3.5
9.7%
2.9%
23
81%
60.1
90
Millennium & Copthorne Hotels PLC
MLC
FTSE Mid 250
Travel & Leisure
4.8
12.4%
2.6%
18.2
79%
14.5
25
MITIE Group PLC
MTO
FTSE Mid 250
Support Services
2.83
15.3%
3.4%
19.8
98%
13.7
38
Morrison (Wm) Supermarkets PLC
MRW
FTSE 100
Food & Drug Retailers
2.81
16.0%
3.8%
18.7
86%
22.1
42
National Grid PLC
NG.
FTSE 100
Gas; Water & Multiutilities
6.93
9.3%
5.7%
14.1
76%
3.9
119
Next PLC
NXT
FTSE 100
General Retailers
36.18
8.9%
2.5%
22.1
90%
21
123
Old Mutual PLC
OML
FTSE 100
Life Insurance
1.65
-8.1%
3.5%
11.5
71%
Page 13
Rank Name
Epic
Index
Sector
Price (ÂŁ)
Growth Yield PE10 Consistency
Interest cover
167
Oxford Instruments PLC
OXIG
FTSE Mid 250
Electronic & Electrical Equipment
13.04
13.2%
0.8%
75.5
60%
35.9
56
Paragon Group of Companies (The) PLC
PAG
FTSE Mid 250
Financial Services
1.85
-11.3%
2.2%
2.5
71%
2
116
Pearson PLC
PSON
FTSE 100
Media
12.01
8.4%
3.5%
25.9
83%
10.8
47
Pennon Group PLC
PNN
FTSE 100
Gas; Water & Multiutilities
7.44
11.8%
3.6%
24.8
95%
3.3
80
Premier Farnell PLC
PFL
FTSE Mid 250
Support Services
1.9
3.9%
5.5%
14.9
69%
7.4
137
Provident Financial PLC
PFG
FTSE Mid 250
Financial Services
13.1
0.7%
5.3%
19.8
67%
2.9
93
Prudential PLC
PRU
FTSE 100
Life Insurance
7.84
6.8%
3.2%
23.2
91%
105
PZ Cussons PLC
PZC
FTSE Mid 250
Personal Goods
3.05
10.6%
2.2%
26.6
95%
110
Rathbone Brothers PLC
RAT
FTSE Mid 250
Financial Services
12.65
3.7%
3.6%
21.6
85%
27.6
32
Reckitt Benckiser Group PLC
RB.
FTSE 100
Household Goods & Home Construction
35.97
18.3%
3.5%
25.2
100%
71.3
127
Reed Elsevier PLC
REL
FTSE 100
Media
5.94
6.5%
3.6%
20.7
74%
4.3
159
Renishaw PLC
RSW
FTSE Mid 250
Electronic & Electrical Equipment
15.5
10.3%
2.5%
35.3
83%
219.6
33
Restaurant Group (The) PLC
RTN
FTSE Mid 250
Travel & Leisure
3.22
15.0%
3.3%
22
95%
32.2
94
Rexam PLC
REX
FTSE 100
General Industrials
4.24
0.4%
3.4%
14
76%
4.1
17
Rio Tinto PLC
RIO
FTSE 100
Mining
27.16
21.1%
3.3%
10.2
83%
35.5
114
Rolls-Royce Group PLC
RR.
FTSE 100
Aerospace & Defense
8.21
16.0%
2.1%
29.4
86%
32.1
95
Rotork PLC
ROR
FTSE Mid 250
Industrial Engineering
21.57
17.5%
1.7%
41.9
100%
859.8
76
RPC Group PLC
RPC
FTSE Mid 250
General Industrials
4.3
10.8%
3.3%
19.3
88%
6.3
81
RPS Group PLC
RPS
FTSE Mid 250
Support Services
2.4
14.1%
2.3%
19.3
86%
19.7
2
RSA Insurance Group PLC
RSA
FTSE 100
Nonlife Insurance
1.14
18.9%
8.1%
10.8
82%
134
SABMiller PLC
SAB
FTSE 100
Beverages
27.99
14.1%
2.1%
36.7
90%
6
50
Sage Group (The) PLC
SGE
FTSE 100
Software & Computer Services
2.95
15.7%
3.3%
22.8
93%
23.6
82
Sainsbury (J) PLC
SBRY
FTSE 100
Food & Drug Retailers
3.33
14.7%
4.8%
20.3
60%
7
101
Savills PLC
SVS
FTSE Mid 250
Real Estate Investment & Services
3.94
3.8%
3.4%
14.4
76%
28.8
72
Schroders PLC
SDR
FTSE 100
Financial Services
14.07
10.9%
2.8%
20.9
88%
53
Segro PLC
SGRO
FTSE Mid 250
Real Estate Investment Trusts
2.32
-8.6%
6.4%
3.6
69%
1.5
141
Senior PLC
SNR
FTSE Mid 250
Aerospace & Defense
1.97
13.3%
1.9%
27.8
81%
8
78
Serco Group PLC
SRP
FTSE 100
Support Services
5.64
18.6%
1.5%
29.1
100%
6.4
156
Severn Trent PLC
SVT
FTSE 100
Gas; Water & Multiutilities
17.56
3.9%
4.0%
22.7
62%
3
129
Shanks Group PLC
SKS
FTSE Mid 250
Support Services
0.89
-0.6%
3.9%
13.1
60%
3.1
117
Smith & Nephew PLC
SN.
FTSE 100
Health Care Equipment & Services
6.69
12.0%
1.6%
21.4
88%
74.2
144
Smith (DS) PLC
SMDS
FTSE Mid 250
General Industrials
1.61
-0.6%
3.7%
17.8
71%
3.8
145
Smiths Group PLC
SMIN
FTSE 100
General Industrials
10.41
3.0%
3.5%
17.1
64%
7.2
126
Spectris PLC
SXS
FTSE Mid 250
Electronic & Electrical Equipment
16.79
12.4%
2.0%
30.1
93%
12.5
66
Spirax-Sarco Engineering PLC
SPX
FTSE Mid 250
Industrial Engineering
19.31
12.7%
2.5%
26.6
100%
86.5
10
SSE PLC
SSE
FTSE 100
Electricity
13.79
16.5%
5.8%
15.8
90%
7.9
154
St James's Place PLC
STJ
FTSE Mid 250
Life Insurance
3.4
8.1%
2.4%
28.4
88%
67
Stagecoach Group PLC
SGC
FTSE Mid 250
Travel & Leisure
2.88
13.7%
2.7%
18.5
83%
71
Standard Chartered PLC
STAN
FTSE 100
Banks
14.01
6.4%
3.4%
15.6
85%
6.3
100
Stobart Group Ltd
STOB
FTSE Mid 250
Industrial Transportation
1.13
-9.0%
5.3%
7.5
57%
7.1
69
Synergy Health PLC
SYR
FTSE Mid 250
Health Care Equipment & Services
8.93
20.8%
2.0%
29
98%
5.7
120
Tate & Lyle PLC
TATE
FTSE 100
Food Producers
6.55
2.1%
3.8%
15.7
71%
10.9
136
Ted Baker PLC
TED
FTSE Mid 250
General Retailers
10.08
9.4%
2.3%
30.2
93%
113.4
98
Telecom plus PLC
TEP
FTSE Mid 250
Fixed Line Telecommunications
8.14
23.2%
3.3%
45.3
83%
193.1
164
Templeton Emerging Markets Inv Tr PLC
TEM
FTSE Mid 250
Equity Investment Instruments
5.34
6.5%
1.1%
112.3
88%
20
Tesco PLC
TSCO
FTSE 100
Food & Drug Retailers
3.4
9.7%
4.3%
14.5
98%
8.6
3
Tullett Prebon PLC
TLPR
FTSE Mid 250
Financial Services
2.9
16.0%
5.7%
8.4
88%
9.9
148
Tullow Oil PLC
TLW
FTSE 100
Oil & Gas Producers
13.47
21.8%
0.9%
64.6
83%
10.2
68
UK Mail Group PLC
UKM
FTSE Small Cap
Industrial Transportation
2.36
2.8%
7.7%
11.3
64%
160.8
77
Ultra Electronics Holdings PLC
ULE
FTSE Mid 250
Aerospace & Defense
15.27
15.5%
2.5%
25
90%
31.6
150
Unilever PLC
ULVR
FTSE 100
Food Producers
22.65
3.8%
3.4%
18.6
69%
13.1
142
United Utilities Group PLC
UU.
FTSE 100
Gas; Water & Multiutilities
7.13
-3.7%
4.5%
16.1
60%
2.5
4
Vedanta Resources PLC
VED
FTSE 100
Mining
8.61
27.7%
4.0%
8.9
90%
6.6
102
Victrex PLC
VCT
FTSE Mid 250
Chemicals
13.12
15.0%
2.5%
31.6
95%
635.1
18
Vodafone Group PLC
VOD
FTSE 100
Mobile Telecommunications
1.83
11.1%
5.2%
13.1
88%
8.8
86
Weir Group PLC
WEIR
FTSE 100
Industrial Engineering
16.01
18.8%
2.1%
30.5
95%
24.3
161
Whitbread PLC
WTB
FTSE 100
Travel & Leisure
21.42
9.0%
2.4%
27.2
74%
10
133
William Hill PLC
WMH
FTSE Mid 250
Travel & Leisure
2.98
-10.2%
3.2%
11.8
64%
8.1
55
WPP Group PLC
WPP
FTSE 100
Media
8.19
12.7%
3.0%
19.9
95%
3.9
24
Xstrata PLC
XTA
FTSE 100
Mining
9.01
21.2%
2.8%
9.6
86%
28.5
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Dear Fellow Investors Changes to the stock screen and ranking system I’m sure that by now many of you have read through the investment analysis worksheets which are available on the web site. The approach laid out in those worksheets represents the latest version of my investment strategy. However, due to technical limitations the stock screener and ranking system used in this newsletter had some slight differences to the worksheets. In the worksheets a share is valued using four quantitative criteria: growth, yield, value and consistency (full details are in the worksheet). Growth is measured as the combined growth of a rolling 3 year average for earnings and dividends, over a period of 10 years. Yield is measured as the current dividend yield. Value is measured using PE10, which is the ratio of the share price to the average earnings of the last 10 years. Consistency is measured as the combination of the number of profitable years, dividend paying years, record profits and record dividends, over the last 10 years. Many of these are unique measures and are not available from mainstream data providers, which means that the ranking system had to use some alternative measures. For example, in the growth measurement, dividend growth was taken as the growth between the dividend 10 years ago to today’s dividend, rather than from the 3 year average dividend 10 years ago to the most recent 3 year average dividend. Also, the consistency score was missing completely from the rankings. From this issue forward the ranking system represents the system used in the worksheets more closely. Growth is now measured using the growth of 3 year averages for revenue, earnings and dividends, as per the worksheet. Stocks are now ranked for dividends by using the 10 year average dividend payments, rather than just the current year. It’s effectively a PD10 ratio like PE10. This still rates high yield shares highly, but will tend to prefer companies that have paid a high dividend relative to today’s price over the longer-term, rather than companies that have only recently switched to higher dividend payments. Value is still ranked using PE10, and now the consistency score is part of the ranking process. The market is ranked by each of these four factors in turn, generating four ranks for each share. These separate ranks are then added together to give the master rank which is the one used in the newsletter. Non-dividend payers excluded In order for the calculations to work, and also because of the nature of this investment strategy (capital growth and a reliable, growing income), companies that do not have 10 years of unbroken dividend payments are excluded. If you have any questions, comments or suggestions for improvement, please let me know. Sincerely John Kingham Editor Page 15
IMPORTANT DISCLAIMER: The author is not registered as an investment advisor or as an independent financial advisor and does not provide individual investment advice. Neither the author nor this document are regulated by the Financial Services Authority. No information provided in this document should ever be construed as investment advice. It is prepared for education and information only. The specific needs, investment objectives and financial situation of any particular reader have not been taken into consideration and the investments mentioned may not be suitable for any individual. The information contained in this document is not intended to be an offer to buy or sell or a solicitation of an offer to buy or sell any securities. Readers must not base any investment decision solely on the basis of this document; instead they should seek independent financial advice. The information in this document and any expression of opinion by the author have been obtained from or are based on sources believed to be reliable but the accuracy or completeness of any such sources or the author’s interpretation of them cannot be guaranteed although the author believes the document to be clear, fair and not misleading. The author receives no compensation from and is not affiliated with any company mentioned in this document other than possibly receiving advertising revenue via a third party. The views reflected in this document may be wrong and may change without notice. To the maximum extent possible at law, the author does not accept any liability whatsoever arising from the use of the material or information contained herein. INVESTMENT RISK: The value of shares can fall as well as rise. Dividend payments can fall as well as rise. Any information relating to past performance of an investment or investment service is not necessarily a guide to future performance. There is an additional risk of making a loss when you buy shares in certain smaller companies. There is a big difference between the buying price and the selling price of some shares and if you have to sell quickly you may get back much less than you paid. Share prices may go down as well as up and you may not get back the original amount invested. It may be difficult to sell or realize an investment. You should not buy shares with money you cannot afford to lose. DISCLOSURE RULES: When content is published about a company and the author has a position or beneficial interest in it, that fact will be disclosed. In addition to the above disclosure requirement, the author follows additional trading restrictions and guidelines. These restrictions require that the author: ·
Hold any stocks owned for at least 10 full market business days.
·
Cannot write about a stock for 2 business days before and after purchasing or selling the stock.
DISCLOSURE: The author owns shares in all of the companies in the model portfolio and intends to buy shares in any new model portfolio investments, and sell the shares of any model portfolio holdings which are sold. CONFIDENTIALITY: This document is for subscribers only. Please retain it for your own exclusive use and treat it as confidential. Copyright John Kingham, 2012. Offices at Unit 5, Pluto House, 19-33 Station Road, Ashford, Kent, TN23 1PP. Subscribe online at ukvalueinvestor.com
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