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Monthly market outlook: April 2018

April 2018


Tags: Macro Economics

Investors have had to endure a volatile first few months of 2018 on the stock market.

Selling and scandals in the technology sector, geo-political tensions and a war of words over trade have all contributed to the up and down performance. As at close on the 16 April the FTSE 100 was 6.4% lower year-to-date.

Morrisons

Supermarket Morrisons (MRW) updates on first quarter trading on 5 May. The company has enjoyed a recovery in its fortunes under chief executive David Potts since his appointment in March 2015. Morrisons has a higher customer overlap with discounters Aldi and Lidl compared with peers and a near-halving of free cash flow generation year-on-year to £350 million in the year to 4 February 2018, despite carrying less debt, has provided ammunition for critics of the business. On a more positive note the company is expanding its partnerships with several third parties. The company already has tie-ups with Amazon – ‘Morrisons at Amazon’ is being expanded into more postcodes and cities – and forecourts play Rontec. It is building on this by supplying neighbourhood retailer McColl’s (MCLS) with branded goods through its revived Safeway brand and has also inked a wholesale tie-up with Channel Islands-based Sandpiper.

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C&C Group

The company behind Magners cider C&C Group (CCR) may update on its acquisition plans alongside its full year numbers on 16 May. The company has emerged as a bidder for the Matthew Clark Bibendum businesses from the collapsed drinks distributor Conviviality Retail (CVR). The transaction is likely to be aimed at improving the distribution of its products in the UK. The company may face some hard questions over the deal given a patchy track record with previous M&A. Its acquisition of US rival Vermont Hard Cider for $305 million did not work out too well. Last year the carried value of the Vermont business on the balance sheet was market down to just $55 million.

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TalkTalk

Broadband and calls supplier TalkTalk (TALK) does not look in great shape heading into its full year results on 24 May. TalkTalk has a patchy recent operating track record to say the least as it faces severe competition from rivals such as BT, Sky and Virgin Media which are armed with larger balance sheets. Last year’s statutory pre-tax profit of £70 million was up on the £58 million in the previous 12 months yet that remains well off the pace of past years – it reported a £122m equivalent figure back in 2013. Other operational prangs in the recent past (2015’s badly handled cyber attack for one) has savaged the shares and left investor returns in tatters. The stock has effectively halved in the past year and has collapsed from above 400p levels over the past three.

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Writer: Tom Sieber Tags: Macro Economics

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Selftrade does not provide investment advice. This article is the authors view and is not the view or opinion of Selftrade and Selftrade accepts no liability for any loss caused as a result of the use of this information. The opinions expressed are those of the author at the time of writing and should not be interpreted as investment advice.

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