We have had a couple of announcements from CIS Portfolio stocks today. Firstly Bellway (BWY) the housebuilder reported another strong trading update for the first half of their current financial year. As expected, given the recent background of rising house prices, this is again a strong update. This was boosted by stronger than average price rises thanks to the mix of houses they sold this period with more London apartments and fewer affordable homes.
Looking forward they say they have a strong order book and land bank to continue to deliver on going volume growth of around 10% in the current year aided by the government initiatives to increasing housing output. So with government support on going and interest rates seemingly on hold until next year the shares, which have come back with the market recently, look good value on around 9x this years earnings with a well covered 3.7% yield and a top Compound Income Score of 100. They have more recently traded on up to a 10x PE, which suggests there could be scope for some upside from here towards recent highs around 2800p to 2900p, although this may of course be curtailed by the current economic and market malaise.
Meanwhile 32Red(TTR) one of the stars of the CIS Portfolio when it doubled in around 3 months recently, has come out with a pleasant surprise by way of a special dividend of 3p per share which goes XD next week to be paid in March. So that is worth a decent 2% or so on the current share price and will be in addition to the final dividend which they are due to be announced on 10th March 2016 which they have already said will be slightly ahead of expectations. This one is on a fuller looking rating of around 20x with a 2% yield for the year they are just about to report. That is however expected to fall sharply to more like 12x and it still Scores 99 on the CIS. Given the strong forecast growth it still looks reasonable on that basis despite the doubling in the share price.