Our contract writers at Fool.co.uk are always on the lookout for wonderful companies available to pick up at a fair price — much like stock superstar Warren Buffett himself!
Kingfisher
What it does: Kingfisher is a global provider of home improvement products and services to consumers and trade professionals.
By Mark David Hartley. The DIY giant and parent company of B&Q, Kingfisher (LSE: KGF), is being heavily shorted by several fund managers, including BlackRock and Millennium Capital. Rising inflation and high interest rates have caused a slump in sales, forcing Kingfisher to announce three profit warnings in six months. Earnings and sales are now expected to decline in the coming 12 months.
But I think the analysts are being overly cautious.
The economy has been struggling a bit but I feel that change is on the horizon — and the shorters might come up short. The UK election is expected to flip things on their head and I expect it’ll reignite the local economy. That could spark accelerated interest rate cuts, boosting the housing market and the home improvement industry. With B&Q leading the DIY and home improvement market in the UK, I expect Kingfisher would grab a fair share of that growth.
Mark David Hartley does not own shares in any of the companies mentioned.
Unilever
What it does: Unilever is one of the world’s biggest manufacturers of beauty products and household goods.
By Royston Wild. Fast-moving consumer goods (FMCG) giant Unilever (LSE:ULVR) has a long history of beating analyst expectations. I feel there’s a strong chance that it will repeat the trick when half-year results are published next week (25 July).
The FTSE 100 firm surpassed market forecasts with first quarter results it released in April. Underlying sales rose 4.4% for the period to €15bn, the top line driven by a mix of rising volumes and improved pricing.
Unilever’s portfolio is packed with formidable brands that remain in high demand even when prices are hiked. Indeed, underlying sales of its 30 so-called Power Brands leapt 6.1% during quarter one as volumes stomped higher.
These Power Brands — which include the likes of Dove soap and Hellmann’s mayonnaise — each generate annual turnover above €1bn. And Unilever has considerable marketing budgets it can use to ensure they keep flying off the shelves.
Inflationary pressures remain a threat that might dent sales and squeeze margins. But on balance, I believe this is a top Footsie stock to own.
Royston Wild owns shares in Unilever.
Watches of Switzerland
What it does: Watches of Switzerland is a retailer of luxury timepieces with an e-commerce platform and showrooms in the UK, Europe, and the US.
By Paul Summers. It’s easier to surpass expectations when those expectations are already pretty low. For this reason, I think Watches of Switzerland (LSE: WOSG) looks interesting.
Back in May, the company predicted higher revenues for the new financial year. Given that most companies in the luxury sector have been having an awful time, this chink of light was jumped on by the market. The shares soared 19% on the day.
Since then, we’ve not had much movement, perhaps because investors are waiting for more detail on the trading outlook in the firm’s full-year results (due 27 June).
Even so, the shares still change hands for just nine times forecast FY25 earnings.
Now that UK inflation has hit the Bank of England’s 2% target and a late-summer cut to interest rates looks increasingly likely, I wonder if we could be at the start of a sustained recovery.
Paul Summers has no position in Watches of Switzerland
The post 3 UK stocks Fools think could make a mockery of analyst earnings forecasts appeared first on The Motley Fool UK.
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The Motley Fool UK has recommended Unilever Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
