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Value Investing In UK Stocks For 2015

|Includes: Aberdeen Asset Management PLC (ABDNF), ASBFF, BTAFF, BTDPF, DEO, EXPGF, GOLD, HRGLF, SHNWF, SHPG

Value Investing in UK Stocks for 2015

Summary

  1. Stocks to watch in 2015
  2. Value portfolio - Buffet-style investment
  3. No technology stocks
  4. Investing in defensive and growth sector
  5. Contrarian and Bottom Up approach
  6. UK stocks only

Barratt Development

Sector : Household Goods & Home Construction

Good Price Levels : 410.00 p - 421.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

58.51%

Short term Gearing

Low

Correlation with Sector Index

0.83

Long term Gearing

Low

Beta

0.94

Bankruptcy Risk

Low

     

Positive Factors

  1. As of Jan 10, 2015, the consensus forecast amongst 40 polled investment analysts covering Barratt Developments Plc advises that the company will outperform the market
  2. Year on year Barratt Developments PLC grew revenues 21.13% from 2.61bn to 3.16bn while net income improved 308.84% from 74.70m to 305.40m.
  3. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 312.00% and 306.38%, respectively.

Aberdeen Asset Management

Sector : Financial Services

Target Entry Level: 395.00p - 405.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

38.03%

Short term Gearing

Low

Correlation with Sector Index

0.86

Long term Gearing

Low

Beta

0.80

Bankruptcy Risk

Caution

     

Positive Factors

  1. As of Jan 3 2015 the consensus forecast amongst 45 polled investment analysts covering Aberdeen advices that the company will outperform the market
  2. Aberdeen Asset Management reported semi annual revenues of 614.10M. This bettered the 609.95M consensus of the analysts covering the company
  3. Revenues for the full year 2014 of 1.12B is 3.63% above the prior year's results
  4. Year on year, growth in dividend per share increased by 12.5%

Hargreaves Lansdown

Sector :Financial Services

Target Entry Level: 870.00p - 915.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

68.44%

Short term Gearing

Low

Correlation with Sector Index

0.90

Long term Gearing

Low

Beta

0.88

Bankruptcy Risk

Low

     

Positive Factors

  1. In 2014, HL reported a dividend of 0.22 GBP, which represents a 8.27% increase over last year. The 15 analysts covering the company expect dividends of 0.33 GBP for the upcoming fiscal year, an increase of 46.05%
  2. Year on year HL grew revenues 22.57% from 292.40M to 358.39M, while net income improved 9.23% from 148.39M to 162.09M
  3. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 8.27% and 9.62% respectively

Schroders

Sector :Financial Services

Target Entry Level:2100.00p - 2150.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

32.46%

Short term Gearing

Medium

Correlation with Sector Index

0.94

Long term Gearing

Medium

Beta

1.30

Bankruptcy Risk

Caution

     

Positive Factors

  1. Year on year SDR grew revenues 26.92% from 1.4254B to 1.809B, while net income improved 24.67% from 282.90M to 352.70M
  2. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 34.88% and 24.41% respectively

Associated British Foods

Sector :Food Producers

Target Entry Level:2980.00p - 3000.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

31.52%

Short term Gearing

Low

Correlation with Sector Index

0.98

Long term Gearing

Low

Beta

0.61

Bankruptcy Risk

Low

     

Positive Factors

  1. Year on year Associated British Foods PLC had relatively flat revenues (13.32bn to 12.94bn), though the company grew net income 30.26% from 585.00m to 762.00m. A reduction in the cost of goods sold as a percentage of sales from 75.82% to 75.66% was a component in the net income growth despite flat revenues
  2. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 6.25% and 30.26%, respectively

British American Tobacco

Sector :Tobacco

Target Entry Level:3400.00p - 3450.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

13.57%

Short term Gearing

Medium

Correlation with Sector Index

0.99

Long term Gearing

Low

Beta

0.52

Bankruptcy Risk

Low

     

Positive Factors

  1. As of Jan 10, 2015, the consensus forecast amongst 31 polled investment analysts covering British American Tobacco plc advises investors to hold their position in the company
  2. Year on year British American Tobacco PLC had little change in net income (from 3.7970bn to 3.9040bn). Revenues were also little changed (from 15.1900bn to 15.2600bn.)
  3. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 5.56% and 5.03%, respectively

Experian

Sector :Support Services

Target Entry Level:1000.00p - 1050.00p

Is the Sector Growing : No

Earnings History :Consistent

Intrinsic Value History :Consistent

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

9.34%

Short term Gearing

Medium

Correlation with Sector Index

0.90

Long term Gearing

Low

Beta

0.81

Bankruptcy Risk

Low

     

Positive Factors

  1. Year on year Experian PLC had relatively flat revenues (4.73bn to 4.84bn), though the company grew net income 108.01% from 362.00m to 753.00m. A reduction in the cost of goods sold as a percentage of sales from 47.51% to 46.49% was a component in the net income growth despite flat revenues
  2. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 7.91% and 210.67%, respectively

Shire

Sector :Pharmaceuticals & Biotechnology

Target Entry Level:4100.00p - 4150.00p

Is the Sector Growing : No

Earnings History :Consistent

Intrinsic Value History :Consistent

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

27.08%

Short term Gearing

Low

Correlation with Sector Index

0.65

Long term Gearing

Low

Beta

0.71

Bankruptcy Risk

Low

     

Positive Factors

  1. Shire plc had 3rd quarter 2014 revenues of 1.60bn. This bettered the 1.46bn consensus of the 6 analysts covering the company. This was 6.32% above the prior year's 3rd quarter results
  2. Year on year, both dividends per share and earnings per share excluding extraordinary items growth increased 15.00% and 73.92%, respectively

Diageo

Sector :Beverages

Target Entry Level:1700.00p - 1750.00p

Is the Sector Growing : No

Earnings History :Consistent

Intrinsic Value History :Consistent

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

14.42%

Short term Gearing

Low

Correlation with Sector Index

0.94

Long term Gearing

Low

Beta

0.64

Bankruptcy Risk

Low

     

Positive Factors

  1. Diageo PLC's revenues grew exponentially for the past four years. However, the firm's revenue for 2014 fell 9.25% from 11.3bn to 10.3bn. This along with an increase in selling, general and administrative costs has contributed to a reduction in net income from 2.5bn to 2.2bn, a 8.32% decrease
  2. Year on year, growth in dividends per share increased 9.07% while earnings per share excluding extraordinary items fell by 4.94%

Randgold Resources

Sector :Gold Mining

Target Entry Level:3950.00p - 4050.00p

Is the Sector Growing : Yes

Earnings History : Consistent growth

Intrinsic Value History : Consistent growth

Management performance History : Excellent

Risk and Debt Analysis

Risk

Debt

Annual Volatility

36.05%

Short term Gearing

Low

Correlation with Sector Index

0.38

Long term Gearing

Low

Beta

0.47

Bankruptcy Risk

Low

     

Positive Factors

  1. As of Jan 07, 2015, the consensus forecast amongst 40 polled investment analysts covering Randgold Resources Limited advises that the company will outperform the market
  2. Year on year Randgold Resources Ltd's revenues fell 3.84% from 1.18bn to 1.14bn. This along with an increase in the cost of goods sold expense has contributed to a reduction in net income from 431.80m to 278.38m, a 35.53% decrease
  3. Randgold Resources Limited had 3rd quarter 2014 revenues of 283.23m. This bettered the 275.03m consensus of the 2 analysts covering the company. This was 3.28% below the prior year's 3rd quarter results

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: The information contained in this report has been compiled by Author from sources believed to be reliable, but no representation or warranty, express or implied, is made by the author or its affiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute Author's judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the full extent permitted by law neither Author nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein.