{"id":590,"date":"2016-12-20T13:14:41","date_gmt":"2016-12-20T13:14:41","guid":{"rendered":"http:\/\/frugalstudent.co.uk\/?p=590"},"modified":"2016-12-21T12:16:24","modified_gmt":"2016-12-21T12:16:24","slug":"christmas-share-tips","status":"publish","type":"post","link":"https:\/\/frugalstudent.co.uk\/index.php\/2016\/12\/20\/christmas-share-tips\/","title":{"rendered":"Share tips for christmas – Top 3"},"content":{"rendered":"

My 3 share tips for Christmas.<\/span><\/p>\n

Everyone loves share tips – especially if we have a little extra money from Farther Christmas to spend!<\/span><\/p>\n

It can be tough sometimes to come across dividend stocks at attractive valuations so I\u2019m going to give you a gift.<\/span><\/p>\n

Here are my top 3 share tips for you this Christmas!<\/strong><\/span><\/p>\n

 <\/p>\n

1. Next Plc<\/strong><\/span><\/p>\n

\u00a0\"\"<\/strong><\/p>\n

I really think that Next is a gem of a stock.<\/span><\/p>\n

People have dumped Next harshly over the past few months due to slowing sales and the falling pound.<\/span><\/p>\n

Sales are slowing there\u2019s no doubt about that, but the balance sheet remains robust.<\/span><\/p>\n

Next has monster cash flow.<\/span><\/p>\n

It earned \u00a3608mn from its operations in 2016 and had so much money it paid out a \u00a3550mn special dividend!<\/span><\/p>\n

It\u2019s payout ratio currently stands at 35% meaning that a drop in earnings could still see Next comfortably pay it\u2019s dividend.<\/span><\/p>\n

As far as competition goes everyone is pointing to ASOS as Next\u2019s kryptonite.<\/span><\/p>\n

But let\u2019s put things in perspective here. ASOS trades at a crazy price to earnings multiple of 114 while next trades at a cool 11.<\/span><\/p>\n

Even with it\u2019s value artificially inflated by demand, ASOS\u2019s market cap is \u00a34bn. Next is still worth a whopping \u00a37bn even at these low multiples.<\/span><\/p>\n

That\u2019s right: Next is getting hammered and yet still has a larger market cap.<\/span><\/p>\n

I certainly know where the value is right there!<\/span><\/strong><\/p>\n

In terms of the overall retail sector. It\u2019s tough.<\/span><\/p>\n

The falling pound has made importing goods more expensive for retail companies and the British public simply aren\u2019t willing to pay more for their clothes.<\/span><\/p>\n

This means retail companies\u2019 margins are coming under pressure as they can\u2019t pass on price increases to customers.<\/span><\/p>\n

But guess who has a ton of breathing room? \u2013 Next!<\/span><\/p>\n

Next has a lovely net profit margin of nearly 16%. This is a lean, efficient operation folks!<\/span><\/p>\n

Their big slayer ASOS? They have a net profit margin of only 2.4%<\/span><\/p>\n

My point here is that everyone in the retail sector will face a squeeze due to the falling pound but Next is in a very good place to deal with that.<\/span><\/p>\n

I even think this industry pressure is a good thing! We may see major problems brewing in competition.<\/span><\/p>\n

I\u2019m confident Next will weather these storms and come out on top.<\/span><\/p>\n

 <\/p>\n

2. Unilever<\/strong><\/span><\/p>\n

\u00a0 \u00a0\"\"<\/p>\n

When it comes to share tips, some people love a solid stock. No dice rolling just a \u2018safe place; for your money.<\/span><\/p>\n

Well, I think Unilever offers just that.<\/span><\/p>\n

Unilever owns some of our most beloved brands;<\/span><\/p>\n

Ben & Jerry’s ice cream, Dove soap, Lipton and more importantly for students \u2013 Pot Noodle!<\/span><\/p>\n

This company is worth over \u00a3100bn and is diversified around the globe.<\/span><\/p>\n

Boasting cool net profit margins of 10%, Unilever\u2019s brands offer considerable protection against currency swings and inflation.<\/span><\/p>\n

Quite simply, people are willing to pay that bit extra for a branded product that is \u2018unique\u2019.<\/span><\/p>\n

Let\u2019s face it, Tesco\u2019s brand \u2018Cookie dough\u2019 just doesn\u2019t quite cut it.<\/span><\/p>\n

We\u2019ve already seen Morrisons bump up some Unilever product\u2019s prices 12.5% and guess what, people are still buying!<\/span><\/p>\n

If you\u2019re looking for some consistent income then Unilever has you covered. With a dividend yield of 2.75%, it\u2019s definitely more attractive than any saving account.<\/span><\/p>\n

In terms of its valuation, it\u2019s certainly not screaming buy but it\u2019s at a fair valuation if you ask me.<\/span><\/p>\n

Down from it\u2019s \u00a338 a share high it\u2019s now trading at a much more reasonable \u00a332.50. At a price to earnings of around 20.5 based on its full year earnings estimates for 2016 it\u2019s certainly above it\u2019s 5 year average of 18.6.<\/span><\/p>\n

But uncertain times inflate the prices of solid stocks like Unilever and sometimes we may just have to pay a premium for that increased safety.<\/span><\/p>\n

 <\/p>\n

3. Greggs plc<\/strong><\/span><\/p>\n

\"\"<\/p>\n

Well I\u2019d be boring if I kept it all safe.<\/span><\/p>\n

For safety, there are plenty of other stocks out there such as Johnson and Johnson and Whitbread but if you want an element of risk, here it is.<\/span><\/p>\n

At nearly 17 times earnings (ttm) the stock appears expensive, and taking look at its historical p\/e ratio we can immediately see that the stock has traded at far lower multiples in the past.<\/span><\/p>\n

But here’s why I’m interested!<\/span>
\n In 2013 Greggs appointed a new CEO who embarked on an ambitious shift in strategy in order to aggressively target a growing food-on-the-go market.<\/span><\/p>\n

That strategy proved a hit with customers!<\/span><\/p>\n

Greggs is now uniquely placed in the food-on-the-go market with its ability to offer hot or cold products and fresh coffee for a competitive price.<\/span><\/p>\n

This really sets the company apart from competitors such as supermarket chains due to the freshness of the offering and from high-end competitors such as coffee shops by its pricing.<\/span><\/p>\n

In addition to this, Greggs has a step up on its competition in relation to costs. <\/span><\/p>\n

With chains such as Costa announcing that they will have to raise prices in order to pay staff the new \u00a37.20 minimum wage, Greggs already pays staff \u00a37.11 an hour meaning that they can maintain prices.<\/span><\/p>\n

And the best thing about it’s step up?<\/span><\/p>\n

Greggs doesn’t even hold 1p of debt meaning there’s nothing to weigh down the balance sheet and plenty of room to take on debt for any potential ventures\/expansions!<\/span><\/p>\n

I also think that if inflation takes off and wallets get squeezed in the UK that Greggs would benefit as a value offering as people shift from expensive food-on-the-go options to a cheap and cheerful alternative.<\/span><\/p>\n

Greggs currently has a dividend yield of 2.72% which isn\u2019t bad, but nothing to get excited about. But what really does excite me is the company\u2019s commitment to grow the dividend.<\/span><\/p>\n

The company managed to grow its dividend by 30% from 2014 to 2015 with a juicy special dividend of 20p per share.<\/span><\/p>\n

With a payout ratio of 52% there is also still room for maneuver to increase the ratio should sales somehow disappoint.<\/span><\/p>\n

 <\/p>\n

So there we have it! My top 3 share tips for Christmas.<\/span>
\n A mix of value, safety and growth.<\/span><\/p>\n

 <\/p>\n

Hungry for more ideas? Take a look at my portfolio holdings <\/a>for some inspiration.\u00a0<\/span><\/p>\n

Are you new to investing? Then this guide<\/a> is perfect for you.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

My 3 share tips for Christmas. Everyone loves share tips – especially if we have a little extra money from Farther Christmas to spend! It can be tough sometimes to…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/590"}],"collection":[{"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=590"}],"version-history":[{"count":0,"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/590\/revisions"}],"wp:attachment":[{"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/frugalstudent.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}