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Sunday shocker: I agree with the Wail on Sunday re a 'dark horse'

By Chris Bailey | Sunday 8 July 2018


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I enjoyed Nigel's update article on his mini 'dividend munchers' ideas portfolio earlier today.  I would completely concur with the Vodafone (VOD) call and came to a similar conclusion myself a few weeks back (see here). 

As for ITV (ITV) I did see one weekend report highlighting how much and England semi-final and final appearance may make for the company given they had (sensibly) not pre-sold the advertising slots.  I am liking the recent bounce but I would hold on (as noted here ) as the Liberty bid aspect interests me and the fragrant Ms McCall is, in my view, a CEO to be backed.  
 
It must be the warm weather but I find myself in agreement with an investing article in the Wail on Sunday on Lloyds (LLOY) which calls the stock a 'dark horse'.  They - like me as you can read here  - tipped the stock in the mid '60s and whilst a bit of dividend income has come in, the shares are clearly lower today compared to the time of the nudge.  Financials globally have been in the doghouse generally year-to-date as the 'goldilocks' hopes for the global economy hilariously popular at the turn of the year, have looked rather shabby.  Financials are - of course - a geared play on an economy because of the nature of their business.
 
Now UK Economy Inc is hardly in rude health but one advantage of the current high level of international scepticism in UK shares - bouncing around the bottom of global fund management sentiment surveys for the thick end of the last two years - creates an opportunity.  I have had a bit of fun trading around in sensible balance sheet, large cap retail shares in articles on this website over the last year or so (and there are still opportunities in that space) but I think Lloyds is another name that can benefit from that too much pessimism tag. 
 
Some geek maths is available for those who like it on the stock at the link above, but a 5%+ yield, more buybacks and a general propensity of homebuilders to pay their mortgage (even if the Bank of England do nudge up rates - the real immediate shockers of this and the rolling over property market is in the housebuilding space) in combination augurs well, along with ongoing cost cutting (sorry bank staff) as we all embrace apps and online banking. 
 
Even PPI is soon to be in the rear view mirror despite the best efforts of the Arnie model head's TV adverts.  I would buy today with the hope of a 70p share price and a bit of dividend income to boot by some next year...rather better than the 1% or under you might get in a typical bank's deposit account over a similar period.  


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