5 Sizzling Summer Shares

Published in Investing on 1 June 2012

We look at some sunshine-themed investment ideas.

Despite the rain of the last few days, we had a pretty glorious bit of weather in the last month, and we hope you had a great Jubilee bank holiday weekend (and if you happen to be reading, Ma'am, congrats on 60 great years). So why not get June off to a seasonal start with a look at a handful of shares that are related in some way to sunshine and holidays?

A travel agent

It's risky business, running a travel agency, and if you get it wrong then it can be a disaster.

That's why I'm not going for Thomas Cook Group (LSE: TCG), which has come within a smidgen of going bust. No, the only sizzling I see Thomas Cook doing is the kind usually associated with tortured souls and pits of fire.

But I think TUI Travel (LSE: TT) is well worth a look. It's having a hard time, along with the rest of the sector, but the firm's interim statement in early May suggested it's gaining market share and reducing its operating loss in what is traditionally the loss-making half of the year.

If the trend continues through to summer bookings, we should see a decent rise in earnings for the full year to September, and even a boost in the dividend -- current forecasts suggest a 7% payout on the 160p shares.

Harness the sunlight

PV Crystalox Solar (LSE: PVCS) makes the silicon that goes into solar power systems, and its shares took a serious beating after the announcement that the government is to slash the value of the feed-in tariffs it pays to people generating their own power. From nearly £2, the shares fell to 4p.

Cliff D'Arcy wrote a couple of weeks ago about the compensation deal the firm has negotiated after the cancellation of a contract. It pumped €90m into the coffers, and the share price more than doubled to 9.5p.

Cliff still wasn't impressed by the outlook for PVCS, citing the unreliability of medium term income in an over-supplied market. But as an outright punt, I can't help thinking that the risk of a small investment might be worth taking. If the cash is enough to keep the company viable as a fish in a smaller pond, it may yet have a sunny future.

Cruising away

I was talking to Fool senior analyst David Kuo last week, and he tells me a few people are starting to take notice of cruise operator Carnival (LSE: CCL).

Carnival suffered badly after the sinking of the Costa Concordia, and that accelerated the decline of the shares, which fell from a 2011 high point of over £30 to around £18 after the disaster.

But forecasts for 2013 suggest a profit rebound. At around the £20 level, the share are on a prospective price-to-earnings (P/E) ratio of 15 for 2013, with a prospective dividend yields of 3.4%. Not a screaming bargain, but it might be a decent earner for the long term.

David Kuo and his team have also been researching the most attractive sectors for 2012, and you can discover the industries they selected in the free Motley Fool guide: "Top Sectors Of 2012".

Happy Snaps

Summer means holidays, holidays mean passports, and passports mean photos. So how about Photo-Me International (LSE: PHTM), the operator of all those photo booths and provider of digital print-processing equipment?

Think such stuff is a thing of the past, with everyone having home computers and printers? Not a bit of it. Photo-Me has seen its share price fall from 81p near the end of 2010 to 40p today, after it was fined £500,000 by the Financial Services Authority for failing to properly disclose inside information.

But today its outlook doesn't seem bad at all, and were looking at a forecast P/E of 10 for the year just ended, and 9 for next year, with prospective dividend yields of 6% and 7% respectively.

Just one Cornetto

Think summer sun, think skin care, think smelling nice. Think Dove, Pond's, Lynx, Impulse. Or think of cooling ice cream like Ben & Jerry's, Carte D'Or, Cornetto, Magnum, Vienetta, Wall's.

Who makes all of these brands? Why, it's our very own Unilever (LSE: ULVR), and it owns many other everyday brands, too, like Hellman's (ideal for those summer salads) and Flora (which can help reduce the summer bulge).

We're looking at a £26bn company, at 16th place in the FTSE 100 and worth 1.6% of the total index, and paying a steady and well-covered 4% dividend. Who wouldn't want some of that?

That's just a first look at a few summery ideas, and closer investigation would be needed before actually buying any. But if you like the sound of any, please share your thoughts below.

Where is the UK's leading dividend stock-picker investing today? The identities of Neil Woodford's favourite blue chips are revealed in this free Motley Fool report -- "8 Shares Held By Britain's Super Investor".

Further investment opportunities:

> Alan does not own any shares mentioned in this article.

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