3 FTSE Shares Hitting New Highs

Published in Investing on 12 September 2012

British Aerospace (LSE: BA) and Telford Homes (LSE: TEF) reach lofty levels.

The FTSE 100 (UKX) hasn't gone anywhere much this week, and is less than a point down on the day to 5,791 points at the time of writing. But last week's good news from the European Central Bank -- that it is launching a cross-Europe bond-buying programme -- has strengthened the index, and set it moving back in the direction of its previous 52-week high of 5,989 points.

Individual companies in the various indices are hitting high points every day. Here are three that are scaling the heights...

British Aerospace

British Aerospace (LSE: BA) is back up to new levels not seen since February, after hitting the same 333p high point again, before falling back a couple of pennies to 331p. In-between, the price has been down all the way to 270p, so that's a 23% recovery from the beginning of June, and up 32% since the share's 52-week low of 251p in November.

But even after that rise, the shares are still looking cheap. Forecasts for the year to December suggest a fall in earnings per share of around 10%, but that still puts them on a price-to-earnings (P/E) ratio of 8.1, and suggests a dividend yield of 5.9% -- and the dividend should be twice covered. Forecasts for 2013 are similar.

Telford Homes

On a day when housebuilder Barratt Developments (LSE: BDEV) fell after releasing interim figures, the much smaller property developer Telford Homes (LSE: TEF) hit a new 52-week high of 134p, before falling back a little to 129p. The firm saw earnings slide last year and we've had two years of slashed dividends, but the year to March 2012 saw the start of a recovery, and 2013 is expected to see earnings back up to pre-slump levels.

If those expectations come good, we should be looking at a dividend of 3.3% from a share on a P/E of 11, improving to 4.2% and 8.9 for 2014.

Costain

In a related field, construction and civil engineering company Costain Group (LSE: COST) hit a peak of 251p today, and is currently just a shade below that on 249p. Last month's interim results were strong, showing a 16% rise in underlying operating profit, and that helped the shares to a 32% rise from early June, and 38% since November's 52-week low. But it's been volatile, with a brief peak approaching today's price in March.

Forecasts look pretty good, and the shares are on a forward P/E of 8 with a 4.4% dividend pencilled in. The firm has net cash, so there's no debt to worry about.

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

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Comments

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richjfool 12 Sep 2012 , 4:54pm

Why did BAe go up so much today, I ponder?

Costain, I've been trying to buy into for a few weeks now, but it just keeps on going up, so I've topped up on Vodafone instead.

paullidd 12 Sep 2012 , 5:11pm

BAe in Talks with EADS about combining their businesses. Hence price rise today.

paullidd 12 Sep 2012 , 5:15pm

Ooh a message from the CEO (BAe).....

Chief Executive message regarding share price movement

You may be aware that there has been recent movement in our share price regarding a potential combination of our company with EADS N.V.

BAE Systems plc and EADS N.V. have a long history of collaboration and are currently partners in a number of important projects, including the Eurofighter and MBDA Joint Ventures. I can confirm that we are in discussions with EADS N.V. about the potential combination of our businesses. This potential combination would create a world leading international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in the UK, the USA and home markets as well as France, Germany and Spain. We and EADS N.V. believe that the potential combination of our two businesses offers additional significant benefits for all our stakeholders, over and above our individual business strategies, which we are both executing strongly today. In particular, we believe that the combination of the two complementary businesses offers the opportunity of greater innovation, long term financial stability, and an extended market presence which will enable us to compete even more effectively on the world stage.

Any agreement on the terms of a potential combination will require approval by the Boards of both BAE Systems and EADS, and would be subject to, amongst other things, a number of Governmental, Regulatory, and Shareholder approvals. There is no certainty that the discussions will ultimately lead to a transaction.

We are a strong, well-run company, successfully implementing our strategy. Our success comes from your dedication and professionalism, and during this process we must continue to focus on meeting all our commitments. I am confident that we will all rise to this challenge. Thank you for all your efforts and you have my assurance we will continue to keep you up to date as the discussions progress.

Ian King
Chief Executive

TMFBoing 13 Sep 2012 , 10:34am

Yes, interesting news from BAe out yesterday afternoon. I had been considering it for the Beginners' Portfolio, but we'll need to see how things develop now.

Foolish best,
Alan
TMFBoing

ANuvver 13 Sep 2012 , 6:23pm

Interesting point made on Bloomberg today that, post merger euphoria, perhaps BA investors are now wondering whether they want to be part of the deal, since this could be seen as buying into fractious core-European policy on defence spending.

I seem to recall the point being made that it's no accident that France and Germany both own exactly 22% of EADS.

The States may be able to knock out another Nimitz class when they feel like it (and under Romney, it seems they might be able to order two or three, with really nice carpets). But long-term defence expenditure is hard enough to push through for a currency-independent single sovereign nation at the moment.

Incidentally, a little joke going round at the MoD at the moment involves sharing carriers with France and wondering which side of the deck to land on...

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