3 Shares The FTSE Should Beat Today

Published in Investing on 13 September 2012

Next (LSE: NXT) and Imagination Technologies (LSE: IMG) both fall.

The FTSE 100 (UKX) hasn't really done much this morning, falling just six points to 5,776. Some would have expected a more positive response by the market to Germany's endorsing of the latest European Stability Mechanism, but the constitutional court did impose a cap on Germany's contribution and it still has to be ratified by parliament.

Elsewhere, some companies fared quite a bit worse than this modest FTSE fall. Here are three constituents of the various indices that took an early bath today...


High-street fashion chain Next (LSE: NXT) was hit by an unexpected 6% fall this morning, dropping 210p to 3,369p, after releasing results for the six months to July. The figures themselves were actually pretty good -- revenue up 4.8% to £1.64bn, profit up 10% to £251m, earnings per share up 19% to 118.5p, and the interim dividend was lifted 12.7% to 31p.

But what dampened the enthusiasm was a warning that the second half has not started so well, with the company telling us that "August and early September sales have been disappointing during what has been an unusually quiet period". But full-year guidance has not changed, and a pre-tax profit of between £575m and £620m is still expected.

Imagination Technologies

You might expect a chip designer whose wares make their way into Apple (NASDAQ: AAPL.US) devices to be soaring after the release of the iPhone 5. But not so, as Imagination Technologies (LSE: IMG) took a 6% tumble, falling 34p to 576p, after releasing a trading update.

We were told that momentum from last year's strong performance has continued, and that royalty revenue growth is carrying on as expected. So why did the shares fall? Maybe it was a brief mention of "macro-economic volatility" and the "tight economic environment". Still, the price has risen almost 20-fold over the past four years, so shareholders shouldn't be complaining.

Home Retail

Shares in Home Retail (LSE: HOME), the owners of Argos and Homebase, slipped 2.7% to 96.7p after the release of a second-quarter update. This time, Argos held steady, which is a good result after a lengthy period of decline, so things could well be stabilising at that division. But Homebase was hit by poor weather, with sales for the six months down 6.2% on last year.

After a couple of months of recovery, the shares are now offering a forecast dividend of 3.3% for the year to February, but on a forward price-to-earnings ratio of 17, they're not looking cheap.

If you don't like news of falling shares, investing in safe dividend-paying companies the Neil Woodford way is a good way to go. The free Motley Fool report "8 Shares Held By Britain's Super Investor" takes a look at some of his major holdings. Click here to get your free copy, while it's still available.

If you prefer the oil and gas sector as a place for your cash, the latest Motley Fool report, "How To Unearth Great Oil & Gas Shares", is just for you. It's free for a limited time, so click here to get your personal copy.

Further Motley Fool investment opportunities:

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

Share & subscribe


The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.


There are no comments yet - why not be the first?

Join the conversation

Please take note - some tags have changed.

Line breaks are converted automatically.

You may use the following tags in your post: [b]bolded text[/b], [i]italicised text[/i]. All other tags will be removed from your post.

If you want to add a link, please ensure you type it as http://www.fool.co.uk as opposed to www.fool.co.uk.

Hello stranger

To add your own comment, please login.

Not yet registered? Register now.