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...

Next

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.

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

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