Sports Direct move down under, Firstgroup have come to the end of the line whilst Halfords wheel off into a French frenzy
For the last month I have been away on vacation in America though the FTSE has seemingly been pretty flat. However, if readers of my column invested in TSB prior to them going live on the FTSE you could have made over 10 per cent within a week, but they were offering a maximum stake of approximately £3,600. This time of the year is when many top investors advise steering clear of the stock exchange due people jetting off for some summer sun causing quite a stagnant market place, and this lack of activity does not help a recovering FTSE.
The week ahead sees the recurrence of Sports Direct who has their year ending results on Thursday. Though the ever-controversial owner Mr Ashley will be hoping for greater growth compared to last years results. Reports suggest the company is going to expand into Australia with the reported buyout of flash sales fashion retailer MySale group. The experts expect Sports Direct to post earnings up 13.6 per cent to £327.1million compared to last year, which was largely due to the acquisition of differing brand products, expansion overseas and rising online sales has caused optimism amongst investors.
Interestingly, the company is causing controversy amongst its own staff with the supposed £187 million bonus fund split between 3,000 staff members, which becomes available should the company double profits over the next three years. Many members of staff/board members who are involved in the company voted for this scheme to be in place, but it has caused some members to question the unity of the board in place at Sports Direct. The main reasoning behind this bonus scheme is to increase profitability in order to ensure staff are motivated to work, and help increase the company’s longevity. During Monday the share price rose by 25.5p an approximate increase of 3.65 per cent after these reports, which helped the company become the top FTSE 100 mover on Monday. The company has a current share price of 724.0p, year high price of 924.0p, and a year low of 568.0p.
FirstGroup release a trading statement on Wednesday when the chief executive will have to answer some pretty tough shareholder/media questions surrounding the company. The past year has seen FirstGroup double their profits, but its shareholders have missed out on dividend payments as the company needs to rebuild its balance sheet in order to keep afloat. The main problem is disgruntled investors who see the chief executive take a greater bonus, which following the non-payment of shareholder dividends will cause outrage on Wednesday. It will be interesting to see how this outcome may affect the share price of the company who are now a linchpin in the public transportation across the United Kingdom. The company’s current share price is 128.20p, year high of 146.14p and a year low of 91.40p.
Recently we have seen the Tour De France visit Yorkshire and London. The hype surrounding the race has certainly got the nation talking, but analysts are predicting Halfords to have profited following the UK cycling boom. Market analysts are expecting Halfords to post some good quarterly results even though their shares have moved sideways recently it’s thought this event can boost their share price. Prior to the tour coming to the UK Halfords bought out the Boardman Cycle brand, which is featured quite heavily during the advertisement breaks on ITV4, and this brand will now be etched into the mind of people who may go out to buy a bicycle. Along with a solid car maintenance side to their business will the Tour De France have contributed a share price rise for the company though only time will tell. Halford’s current share price is 491.0p, year low of 350.0p, and a year high of 515.0p.
Overall, I feel Sports Direct over the short term look a good investment prior to their results on Thursday, as the proposed move over to Australia along with a strong results forecast has prompted optimism amongst investors. I would advise investors to avoid Firstgroup due to the expected dispute between its shareholders, and the board in a meeting on Wednesday with the outcome likely to have an impact on their share price. Halfords looks a solid investment over the next couple of months prior to their next statement, as the full effect of the Tour De France won’t be felt until this result is produced in September.