Sainsbury's update yesterday revealed that Christmas same-store sales rose at the lowest rate seen in eight years. However, Questor thinks there was a lot to be optimistic about in the announcement. The company's like-for-like sales met expectations and its higher-margin (but cheaper) own-label goods are seeing sales growth of 5 per cent, but it is the convenience store format and on-line that are showing good growth.
As well, and when looking out to the long-term, if the UK population continues to rise at the current rate, and there is no reason to expect that it will not, the number of people should hit 70m in the next 15 years, up from about 62.6m today. With more than 7m extra mouths to feed, demand for food and other consumer goods is certain to rise. For all of the above reasons Questor keeps a hold rating on the shares.
The prospects for Aviva this year are so finely poised that any judgment has to be a purely subjective one. The new board, including Mark Wilson, the Chief Executive who took up the job nine days ago, will cut the final dividend for 2012 by as much as 40% in March, or they won't. As one analyst put it, Aviva has now picked all the low-hanging fruit [through disposals for example] and what is left is the drudgework of getting more efficiencies from its remaining British and continental businesses. These are to be had, not least in a revamping of the various overlapping IT systems. Yet Aviva is, by its own admission, where it needs to be to maintain the payout to investors in March. Analysts are split, though, on whether it will.
A cynic might think that a cut in March, by implication blamed on the previous management, gives scope for the payment to be built up again, with Mr Wilson taking the credit. "If I had to take a view, though, I would suggest the payment is safe, which would be good news for the price," The Times's Tempus says.
Despite the continuing unrest in the region, Hikma Pharmaceuticals is still happy to invest in the Middle East. Late in 2011 it bought the ninth-biggest pharmaceuticals company in Morocco; last year it bought into Sudan. It is now buying into Egypt.
took a tumble last spring amid understandable political concerns but are now back to where they were, at which level the company is valued at a respectable £1.5bn. The bulls' argument is that its base is in Jordan and it employs locals in the markets where it operates, while there is pressure on governments in the region to raise spending on healthcare and more prosperous populations will be able to afford it for themselves. Nonetheless, Hikma hedged some of the risk with the purchase a couple of years ago, at a good price, of an American maker of injectable pharmaceuticals. The shares, after their recovery, sell on a chunky 15 times' earnings, which does not suggest much upside, Tempus believes.
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