Market Musings 28/1/2012
We’ve been hit with a tsunami of corporate newsflow in recent days, with airlines and financial stocks in the spotlight. Let’s run through what’s been happening since my last update.
(Disclaimer: I am a shareholder in Ryanair plc) The main scheduled corporate newsflow in Ireland this coming week is Ryanair’s Q3 results on Monday. Bloxham’s Joe Gill provides an excellent preview of them here. In addition to the results, one thing that could act as a catalyst for Ryanair’s share price is news that a key competitor, Spanair, has gone bust. Spanair carried more than 13m passengers in Spain in 2010, which is roughly half of what Ryanair carried in the same time period in that market. Given that Spain accounts for circa 35% of Ryanair’s annual passengers, this news is a clear positive for the stock in my view. Elsewhere, The Irish Times‘ Conor Pope has a very interesting piece on what life in Ryanair HQ is like here.
(Disclaimer: I am a shareholder in Allied Irish Banks plc, Bank of Ireland plc and Irish Life & Permanent plc) There was also a lot of chatter around Ireland’s financial sector. The NTMA said that domestic deposits have stabilised, which is consistent with the most recent updates from both AIB and Bank of Ireland. The recent deposit trends represent a good vote of confidence in the sector. Speaking of votes of confidence in Ireland’s financial sector, Investec announced that it has agreed to buy NCB. Elsewhere, Ireland’s richest man, Denis O’Brien, says that he would consider buying shares in Bank of Ireland.
In the support services space, Ireland’s biggest recruitment firm, CPL Resources, reported strong results despite what it rightly says are “very challenging trading conditions”. I like CPL a lot, given its excellent management team, market dominance and proven track record. I don’t really have space for it in the portfolio at the moment though, and in any event I already have a leveraged play on Ireland Inc in the shape of Bank of Ireland (my other Irish financial holdings account for an embarrassingly small share of my portfolio), so it’s not one I’d be rushing to buy just yet.
(Disclaimer: I am a shareholder in Marston’s plc) In the pub sector we had strong Christmas trading updates from Marston’s, the most recent addition to my portfolio, and also Fuller, Smith & Turner. While the comparatives are obviously helped by the extreme weather conditions in winter 2010, the positive signals from the sector are nonetheless very encouraging.
Switching to macro matters, I have written before about the sorry state of America’s public finances. Two videos that I spotted in recent days really put the US’ problems in this regard in perspective. In the first clip, you can see where so much of the deficit has ended up being ‘invested’ in. The second video features a rant by Rick Santelli that fiscal conservatives will approve of.
In the blogosphere, John McElligott makes a good case for investing in Dart Group, while Mark Carter has a very interesting piece on how the higher risk stocks have been outperforming. I can particularly relate to Mark’s blog, as I’ve been finding so far this year that the stuff I would like to boot out of the portfolio are doing nothing, while the ones I want to buy more of are flying. If only it was the other way around!