Minding the London Stock Exchange’s Business
Independent and Fearless Financial Journalism Funded by Readers
Even a few of our detractors have now come around
Hello Share Twiddlers. Reckitt Benckiser (RKT) makes very well-known hygiene products. And during and after Covid there’s more demand for this kind of thing. Among its well-known brands are Lysol and Dettol. The names conjure up in the mind heavy duty attacks on germs. During the hard times we’re encountering at the moment, folks are often tempted to buy cheaper supermarket own makes but such is the strength of Reckitt’s brands this issue doesn't seem to apply to it.
Another busy Friday on the markets. It is all good fun especially with regard to my holdings in Reckitt (RKT) and SIG (SHI) shares both of which produced positive updates. So a quick appraisal of the good news first…and then I will move onto the continued comedy at AO World (AO.).
Last October I observed that Reckitt Benckiser (RKT) ‘without working hard offers the scope for a £60-70 share price plus picking up a dividend’. In short a holding in the ‘home to the world’s best loved and trusted hygiene, health and nutrition brands’ group theoretically for FY22 is probably over ten times more interesting than government bonds or money in the bank. How many times a month do you – or someone in your household – use Finish, Dettol, Air Wick, Nurofen, Vanish, Harpic, Calgon or Durex products? My guess is more than once. So what about the shares today post the group’s full year numbers publication?
I was already excited about the upcoming week, predominately because a bunch of interesting companies are giving us an update on Monday, Tuesday, Wednesday, Thursday, and Friday. So maybe an existing holding does well or maybe I get an opportunity to consider a new angle. One stock I am going to be watching closely on Monday morning is GlaxoSmithKline (GSK) as I read that ‘Unilever(ULVR) makes £50 billion bid for GSK’s consumer business’.
Like the complete weirdo I am, I do like doing a bit of sector research now and again. I do find it strange that whilst fundamental caution towards fixed income markets still makes a lot of sense, technical (rather than fundamental) bullishness for equity markets seems to have become more important. Typically active management and fundamental investment rationales are akin to one another, as is passive management and technical investment preferences. And then I read that more investors now believe that the S&P 500 – by the end of the year – will not only hit a number of all-time highs above the level achieved in 2017 (62 all-time highs) but also the all-time high of 77 achieved in 1995. No doubt too many of such people are overly excited by Tesla’s market cap reaching $1 trillion and tripling this (or more!) by the end of the decade. As if. Anyhow, back onto stocks I really care about. Three names my pension fund owns have reported today and – very nicely – all are doing rather well (and I think there is more to come).
How many Reckitt (RKT) products have you used this year? I would image we all have at least used one out of the antiseptic brand Dettol, the analgesic Disprin, the sore throat medicine Strepsils, the hair removal brand Veet, the immune support supplement Airborne, the indigestion remedy Gaviscon, the baby food brand Mead Johnson, the air freshener Air Wick or Calgon, Clearasil, Cillit Bang, Durex, Lysol, Mycil, Enfamil, Nutramigen and Vanish. I first bought the stock just shy of £60 a share earlier this year and then as discussed here in late July doubled my position after a share price fall. Currently I am sitting at a small overall profit and have picked up some dividends on the way but how do I feel about the 96 page ‘delivering sustainable growth’ presentation yesterday?
Sometimes I am good at investments…and sometimes I am not so good. Today is an example – fortunately not overly regular – of the latter as the shares I bought in Reckitt (RKT) at 58 quid something in late February this year, are now at 56 quid something. So not exactly awful but far from smart given I have written positively about the stock including on Sunday a couple of times and had plenty of opportunities to make a nice turn and move on. So why the share dump today?
Back in late April I observed that the multinational consumer goods company Reckitt (RKT) saw ‘raised hygiene habits’ and hence had ‘confidence in long term growth’. This helped keep me positive about the share with a seventy-five quid share price target, equivalent to a fifteen percent share price appreciation potential even before you factor in a solid dividend yield. So what to make of today’s announcement that the company is to ‘sell its infant formula business in China for US$2.2 billion’?
Goodness it has been busy over the last couple of days in the corporate earnings world! Yesterday I really wanted to get an opportunity to make more comments about the condom business of Reckitt (RKT), which I positively wrote up here back in February. Anyhow for various reasons or another – absolutely nothing to do with condoms! – I never got around to it. However, despite the positive share price move since February, I still remain a buyer with an over 7500p target.
