3 UK Shares the Market Loves
03/01/2013 7:00 am EST
These three lesser-known London-traded stocks are actually some of the most recommended companies on the exchange, writes David O'Hara of The Motley Fool UK.
Before investing in a company, it is important to gauge what the rest of the market thinks. This will help you to understand what would be needed for the share price to move significantly.
City research analysts are paid to give their verdict on listed companies. I've scanned the FTSE-100 to find the companies that have the highest proportion of positive recommendations issued against them by the analysts. Here are three more of the most popular shares on the market.
This company is the smallest of the FTSE-100's three pharmaceuticals. Shire (London: SHP) has thrived from the sale of its Attention Deficit Disorder treatments.
A boom in diagnosis of ADD in developed countries has led sales to nearly double in the last five years. In that time, earnings per share (EPS) has increased by an average of 30.1% per annum.
The company is expected to increase its dividend for 2012 by 30%, to be followed by a similar increase for 2013. Also, the shares trade on a 2013 price-to-earnings (P/E) ratio of 14.3 times expectations. That's the lowest rating that the shares have been on since the financial crisis.
This packaging company specializes in cans for the soft drinks industry. Rexam (London: REX) is a business with significant economies of scale and predictable sales demand.
These factors and Rexam's modest valuation are the likely cause of the share's popularity. The shares are up 7.9% so far in 2013.
Rexam announced final results earlier this week. The company reported EPS up 5% and dividends up 6%. Brokers are forecasting that Rexam will make EPS of 42.3p for 2013, rising to 45.4p for 2014. The dividend is expected to hit 20.5p in 2014, putting the shares on a yield for the year of 4.1%.
Like many fund managers, Schroders' (London: SDR) profits are geared to the health of the financial markets.
Schroders is forecast to report EPS of 128.5p for 2012, rising to 141.2p this year. This puts the shares on a slight P/E discount to the rest of the companies in the FTSE-100. Schroders shares trade on a forecast yield for 2012 of 2.9%, rising to 3.2% for 2013.
Future movements in the markets will have a big effect on the company's profits. If you expect the current bull market to continue, Schroders could be a very good bet indeed.