Jonny’s Shares – The London Economic

Randgold have been digging up profits and a fruitful reward for staff of BT.

Last week saw British American Tobacco’s share price decline due to the strength of the pound, which affected their profit margins whilst market analysts are still calling for investors to hold shares for a long-term yield. The share dividend paid 47.6p, a six per cent increase compared to last year, but there was a drop in cigarette sales that was relatively small compared to last year suggesting things are improving. In other news, British Telecom (BT) posted some really positive first half of the year results, but the big debate remains what will happen with the premier league football rights battle. Thousands of staff are also receiving approximately £50,000 each after a five year share scheme came to fruition after staff have contributed an average of £7,750 over five years with a windfall of approximately £42,000.

Moving onto this week’s news, Randgold Resources are set to take the lead on Friday with their halfway results for 2014. Market analysts at UBS believe the stock should be downgraded to neutral due to risk to reward ratio, but they feel Randgold is a high quality gold stock, even though currently the company is having technical problems with its mine in the Ivory Coast and have seen the production of gold fall by around ten per cent, which is worrying signs for the company. Contrary to UBS, market analysts at Cancord Genuity have placed a buy rating on the stock with a price target of 5,100p, which is an upscale of 300p from the company’s previous target.

Randgold

Another company to release their first-half trading update on Tuesday will be Glasgow-based Aggreko which provides temporary power supplies for major sporting events. Market analyst predict Aggreko to have a bumper year after securing contracts for the Ryder Cup, Commonwealth Games and World Cup, though this may not be as positive as it seems. The main cause of their profits slightly declining is the strong pound against other currencies, which has increased the cost of international business affecting their profit margins. The expected figures for pre-tax profit in the first half of 2014 is £119 million, but market analysts were forecasting around £145 million at this stage of the year.

But the company is still getting the business for major sporting events, which shows their clients have faith in the products and services provided and with the steer of a new chief executive next year could mean they retain these lucrative contracts. Market analysts suggest the company needs to go back to the drawing board in order to increase prices to cover costs. If this is not done soon then the company could struggle to post good results later in the year.

Agrecco

In a quick bit of news, Legal and General also release an interim result on Wednesday with an expected 17 per cent greater dividend payout compared to their last one, which means the dividend is 4.5 per cent of the companies current share price of 232.10p. Since the economic recovery Legal and General have posted almost 25 per cent greater dividend yields year on year.

Overall, Randgold Resources looks a good long-term investment even though they have had problems with their Ivory Coast gold mines, which will affect their year results, but they still remain a profitable gold firm who excavate top quality products for the market. If Aggreko alter their product costs for the remaining part of 2014 after a resurgent pound then they will be a good long-term investment. The business is there though they face problems with profit margins, which are £20 million down on where they should be. Legal and General look a good long term investment with market analysts predicting greater dividend yields, but over the short term a good dividend can often cause a share price decline so beware.

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