Watch­ing out for Europe

Finweek English Edition - - INVESTMENT - MARC ASH­TON

IN­VESTEC HAS BEEN an ex­cel­lent in­vest­ment over the last year. In­vestec Plc bounced off a 12-month low of R40.91 back in May 2012 and has sub­se­quently rid­den the bull-mar­ket higher and is now f lirt­ing around the R70/share mark.

At the moment the counter trades on an earn­ings mul­ti­ple of around 14 times with a div­i­dend yield of 4.4%, and ac­cord­ing to an­a­lyst con­sen­sus fore­casts on FT.com, the share is still re­garded as a “Buy”. The me­dian price tar­get forecast from the an­a­lysts sees a 7.8% CLOVER IN­DUS­TRIES re­turn for the full-year, but the con­sen­sus forecast is for a de­crease in the an­nual div­i­dend.

If 4% of the re­turn is coming from a div­i­dend and that div­i­dend is ex­pected to de­crease, one has to be cau­tious about the near-term prospects of the group. Throw in con­cern around the EU banks and con­cerns about the rand sell-off be­ing over­done and one must be­lieve that In­vestec is due for a pull-back.

It can’t be val­ued like an EU bank, but ex­pect it to be broadly re-rated with the sec­tor.

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