Beefy British stocks shine through

Despite recent market fluctuations, traditional British stocks appear to have weathered the storm. This week business results were dominated by five traditional British companies, (BT, Rolls Royce, British Land, British Gas and BP) all of whom reported encouraging results. Retail stockbroker, The Share Centre comments on what these results mean for investors, and why investors could feel more confident about British stocks during volatile times.

Nick Raynor, Investment Adviser at retail stockbroker, The Share Centre said: “Despite a mixed bag of results investors’ shouldn’t be disheartened, instead they should look towards the future. These traditional British companies are a good stalwart for any investment portfolio, and any value that once existed has only been enhanced by the recent volatility”.

BT: BUY

“BT’s broadband service continues to perform well. The company reported 177,000 new sign-ups, and on top of this their profit margins continue to improve. In addition, Chief Executive Ben Verwaayen has committed £2.5 billion to share buybacks. However, despite these positive results there is still some concern about BT’s other revenue streams, which fell below consensus forecast.

“On the whole BT’s shares are relatively stable, compared to the rest of the market. Therefore, for investors wanting a safer bet, offering a solid yield (of approximately 6%) and the prospect of steady dividend increases, BT could be the stock to choose”.

Rolls Royce: HOLD

“Rolls Royce’s long-term order book has risen an impressive 76% (£45 billion). Their order book for Asia and the Middle East has also done well, having doubled to £20 billion.

“As expected exposure to the weaker dollar in 2007 inevitably affected results, but given the current market weakness Rolls Royce could be seen as an ideal long-term opportunity for investors”.

British Land: BUY

“Property sectors have enjoyed a good start to 2008 because they were undervalued at the end of 2007. As a result British Land’s results have also been positive. Today’s figures show a Net Asset Value (NAV) of £14.01, which means that their shares are trading on an approximate 44% discount. The NAV could certainly make British Land attractive to private equity firms as a potential takeover target. Alternatively, British Land could decide to borrow funds to close their NAV gap and opt to offer higher dividends”.

British Gas: HOLD

“The natural gas producer delivered increased earnings in the 4th quarter, ahead of analyst expectations, which should please investors, but not necessarily customers following recent price hikes. British Gas also confirmed that their reserves, at current production levels, should be enough for another 46 years (until 2054). Although British Gas dividends have increased, they are still very much a growth stock for investors”.

BP: BUY

“Despite announcing weaker profits earlier this week, we still view BP as a good long-term stock. Going forward oil is going to be a much needed commodity, but BP’s reliance needs to be on reserves not just profits. Could 2008 possibly be the year for acquisitions?”