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The most popular shares in September

3 October 2017

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Last month’s most popular shares among our clients reveal a couple of themes.

Firstly, there’s the attraction of high yields. All but two of the FTSE 100 shares below offer a prospective yield of 4.7% or higher.

I recently wrote two articles on this perennially popular topic, one explaining how I go about selecting income shares, and another that put forward five shares that could be capable of dividend growth. Remember dividends are not guaranteed, and yields are not a reliable indicator of future income.

What’s the secret to selecting a good dividend stock?

Five shares for dividend growth

The other trend which emerged was the popularity of shares which have fallen during the month, and below I take a look at three examples of shares which have found favour with value-seeking investors.

The table shows the FTSE 100 and FTSE 250 shares (excluding investment trusts) with the highest number of net buys (buys minus sells) among HL clients last month. These are provided for your interest, they aren’t a guide as to how you should invest – you should consider your own aims and attitude to risk before making decisions.

If you’re not sure whether an investment is right for you, you should seek advice. Investments can fall as well as rise in value, so you could get back less than you invest.

Top 10 FTSE 100 shares Top 10 FTSE 250 shares
Aviva plc AA
Barratt Developments Capita
BT Group Card Factory
GlaxoSmithKline Greencore
Glencore Greene King
Legal & General Group Indivior
National Grid Marstons
Shire Sirius Minerals
Vodafone Group Sophos
WPP Spire Healthcare Group

Shares listed alphabetically

Greene King

A negative trading update from pub company Greene King saw the share price tumble 15.7% in a day.

The company’s momentum has ebbed away, and like-for-like sales fell 1.2% in the 18 weeks to September. This performance is behind the market as a whole, which dipped by 0.7%, and also worse than the slight growth Green King managed last year.

Greene King said most of the decline can be attributed to ‘value’ food sales. This could mean competition in the casual dining sector is intensifying even further.

The rebranding of Greene King’s Fayre & Square pubs is key to its future prospects. If this revamp can get the customers coming back through the doors, the shares could look good value on their current rating, which is just eight times expected earnings. Nonetheless, with Just Eat and Deliveroo eating into the market, the task facing CEO Rooney Anand is a tough one.

Greene King share price, charts and research

Barratt Developments

Full year results saw completions rise to a nine-year high of 17,395. This, combined with continued house price growth, pushed Barratt Developments' pre-tax profits up 12% to £765m and saw another generous special dividend declared.

All very impressive, but an upbeat trading statement in July meant investors’ expectations had already been raised to lofty levels.

With much of the good news factored in, investors instead focused on comments from the Bank of England. Mark Carney has dropped ever-stronger hints that a first interest rate rise in 10 years might be on the cards.

For the builders, the worry is that higher rates means the cost of borrowing rises, and thus affordability falls.

For now, we still feel the pace of increases will be sedate, given the uncertainty swirling around the UK economy. If this proves to be the case, it’s hard to see demand petering out anytime soon, especially with the Help to Buy schemes seemingly in line for another £10bn boost.

Nonetheless, sentiment in the sector can change quickly. Investors will have already circled 2 November on their calendars, the date of the next MPC meeting. If the Bank raises rates there could well be a few jitters.

Barratt Developments share price, charts and research

Card Factory

Increased costs and the decision not to raise prices dragged down margins in Card Factory's half year results.

This drop more than offset the group’s higher revenues, with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) falling 4% to £32.8m.

Unfortunately, the deterioration in profit margins seen so far this year is expected to impact full year results, with a decline of 2 percentage points now forecast. Investors had previously expected a smaller drop of 1.5%.

As Card Factory steps up investment in its future, debts are heading up too. Lower than expected profits and higher debts mean its target of maintaining debts below twice the level of earnings looks more burdensome.

But we don’t expect the ordinary dividend to come under pressure anytime soon, after all Card Factory remains an extremely cash generative business. However, if it needs to retain more of this cash in order to meet its debt targets, special dividends could be less generous than investors might have hoped.

View the Card Factory factsheet

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Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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