Today I’m looking at two top stocks that share investors should consider buying ahead of next week.
I believe that home callout specialist Homeserve is a top share to buy before interim results are released on Tuesday, November 19. Back in July it advised that it expected “further strong growth”in the current fiscal year (to March 2020) and I’m expecting nothing short of another terrific update next week.
City analysts expect earnings at Homeserve to rise 9% and 11% in financial March 2020 and 2021 respectively, keeping its long record of strong profits growth going. But the FTSE 250 business isn’t just about impressive bottom-line progression as with these predictions come expectations of more solid dividend growth as well.
Over the past half a decade Homeserve has lifted the annual ordinary dividend by almost 90% and furnished shareholders with plump supplementary dividends, too. And in the current financial year a 23.7p per share ordinary dividend is forecasted, up from 21.4p last year and yielding an inflation-beating 2%. Moreover, for fiscal 2021 the 26.2p reward yields an even-better 2.2%.
Now on paper Homeserve isn’t cheap by any stretch of the imagination — at current prices it carries a forward P/E ratio of 28.6 times. I would consider this a fair reflection of the home emergency play’s stonking progress in North America, a region where adjusted profits boomed almost 40% last year, however, and its likely ability to keep delivering brilliant profits and dividend growth well into the 2020s.
Mitchells & Butlers
I also reckon Mitchells & Butlers could be a canny buy ahead of the release of full-year financials on Wednesday, November 20. The pub operator’s share price has swelled a whopping 83% over the past six months but it still remains pretty cheap on paper, as illustrated by its low forward P/E ratio of 11.5 times.
Britons might be holding back on shelling out for material goods given the uncertain economic outlook, though by and large spending on leisure continues to rise. Mitchells & Butlers’s own performance continues to improve and in its recent pre-close update it advised that like-for-like sales were up 3.6% in the 12 months to September. Underlying food sales were up 3.5%, it said, while on the wet side revenues were up an encouraging 3.3%.
Sales continue to grow ahead of the market, too, but brilliant top-line progression is not the only reason to laud Mitchells & Butlers as efforts to maintain strong margins also continue to impress. Indeed, the business has said that it expects operating profit margins to remain stable from fiscal 2018 (at 11.8%) despite an array of rising costs from higher energy and staff bills to bigger food and drink outlay.
City analysts expect earnings at the company to rise 5% this year, and signs of a strong start to the new period could provide the share price with a fresh dose of rocket fuel.