Wolseley is bucking the current downward trend in the market, following a positive note from analysts at Barclays.
The building materials group is 48p better at £41.69, while the FTSE 100 has edged lower, now down 16.45 points at 6693.65. Strong warnings from the Bank of Greece about an uncontrollable crisis if the country left the eurozone has increased investor nervousness, while there is also uncertainty ahead of tonight’s Federal Reserve comments on US interest rates.
But it is the US which is proving a benefit to Wolseley. Barclays analysts said:
Wolseley’s US chief executive, Frank Roach, attended our European Select conference last week. We learned that the company believes its US markets will grow in a 4%-6% range, is confident it will keep on outperforming the market, that margins should continue to climb and that there is healthy pipeline of acquisitions.
We leave our underlying forecasts unchanged but believe there is potential for the US business to beat our estimates in the coming years if the strategy to drive profitable gains in market share continues to be successful. Wolseley is our top pick as, even in our base case, we believe the business will deliver 11% 2015-2018 earnings per share compound annual growth rate, plus a 2.4% 2015 dividend yield and around 4% from capital returns/bolt on acquisitions. The valuation of 15 times 2016 PE screens well across the sector for this level of growth.
Other risers include the typical havens that investors seek in volatile times. So utilities are moving higher, with British Gas owner Centrica climbing 2.6p to 270p, SSE up 11p to £15.98 and BG 6.5p better at 1087.5p.
Lower down the market Promethean World has jumped nearly 25% to 34p after the education technology business received a 40p a share cash offer from Hong Kong listed NetDragon WebSoft. The bid values Promethean at around £83m.
But oil and gas company Sefton Resources, which is facing legal action from former executive chairman Jim Ellerton, has slid 48% to 0.075p after raising £799,500 with a placing of shares at 0.065p each.
