The Week Ahead: Gulfsands & Halfords

Published in Investing on 30 March 2012

It'll be a quiet week ahead of Easter, but we still have a few bits of news coming our way.

As we head into April and towards Easter, the flow of company news is reducing to a trickle, with only a handful of announcements due next week.

Risky exploration

Gulfsands Petroleum (LSE: GPX) will report results for the year to December 2011 on Tuesday, and while it is expected to have been a pretty good year, the exploration and production company is in a rather tricky situation right now -- it's operating mainly in Syria.

And since the escalating EU sanctions against that country, oil production has still gone ahead, but neither Gulfsands nor its Syrian partner Synochem have received any money. As a result, Gulfsands had a hole the size of around $25m in its income stream as of 2 February.

Bikes and cars

We should have a couple of trading updates coming our way on Thursday that should shed some light on the general economy.

One is a pre-close update from Halfords Group (LSE: HFD). The high-street seller of bicycles and bits for cars, and the operator of the Halfords Autocentre (previously Nationwide Autocentre) chain, has suffered in the downturn. Earnings per share are expected to have fallen by about 20% as people have been reining in their spending, but the dividend is forecast to be pretty much around the same as last year, at 22p per share.

On the current price of 310p, that's a yield of 7% if it's held, with forecast earnings putting the shares on a price-to-earnings (P/E) ratio of 9. Debt has been falling as well, and with a modest recovery forecast for the year to February 2013, we could be looking at one of the best bargains on the high street just now.

Wholesale food

When belts are being tightened and consumers are turning to cheaper products, we might expect a cash-and-carry supplier that offers a range of own-label goods to carry on doing well. And that's what's on the cards for Booker Group (LSE: BOK), which will be bringing us a fourth-quarter update on the same day.

Booker has been doing fine right through the crunch, with profits rising steadily, and a net debt position having been turned into net cash. A modest growth in earnings for the year to March 2012 is forecast, together with a strong rise in the dividend. The dividend is only modest, though, at around 2.5%, with the shares on a prospective P/E of 20, which looks a bit steep. But the shares have performed very nicely indeed, going from a late 2008 low of 16p to today's 83p -- a fivefold rise in not much more than three years.

Recruitment

Recruitment specialist Robert Walters (LSE: RWA) is due to provide us with a first quarter statement on Thursday, too. It's the kind of business that should act as a barometer of the general economy, and the firm's erratic financial record over the past few years attests to that. Profits slumped in 2009, but there's been something of a recovery since, though 2012 is expected to be a fairly tough year again.

But because of its cyclical nature, Robert Walters retains net cash and has continued its dividend payout throughout. At 2.2% based on 2012 forecasts and the current share price of 245p, it's not at get-rich-quick levels, but at least it's steady.

Notable announcements next week:

Monday: Andor Technology, InternetQ, Nationwide Accident Repair Services, Toumaz

Tuesday: Gulfsands Petroleum, Huntsworth, Johnston Press, Vernalis

Wednesday: Aberforth Smaller Companies Trust, Burford Capital, Shanks Group

Thursday: easyJet, Victrex, Sandvine Corp, Booker Group, Halfords Group, Robert Walters

Friday: Bank Holiday

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