A quick month end round up of recent results from companies held in the Compound Income Scores Portfolio (CISP). Last week we had interim results from Hays (HAS) which showed strong growth and material investment in their growth markets with 22 countries growing net fees by more than 10%. These are overseas as the UK continued to lag so they are investing and increasing their International consultant headcount by 18% to reflect this.
Looking at the numbers which showed 18% profits and earnings growth and a 10% increase in the dividend leaves them well placed to hit and probably exceed full year forecasts in my view. I say this as even if they were flat in H2 I calculate they would exceed current forecasts and given the momentum and investment they are putting in I'd bee surprised if they were flat in h2, although I guess they will be up against tough comparatives.
Thus I was surprised that the shares came off after the numbers despite on going upgrades. Perhaps this was a behavioural bias coming into play as they were trading around 12 month highs and looked like breaking into new high ground. They have however found support above the previous 12 month high so personally I think this may be a good buying opportunity as they still score reasonably well too.
This week we have had more good results from Croda (CRDA) the high quality chemical company which is therefore relatively expensive on about 24x this coming years earnings and a yield of barely 2%. The results were there or there about but probably not sufficient to push it ahead from here given the rating and especially in the absence of a special dividend which some nay have been looking for.
While Jupiter Asset Management (JUP) the high performing fund manager which has 81% of mutual fund AUM with investment performance above median over three years also came in around forecasts as the earnings level although the dividend in total up 20% was better than expected thanks to the (usual) special dividend. This leaves them on a reasonable looking 14x with a 6%+ dividend yield, assuming markets continue to progress allowing them to pay another special dividend next year. If you are still bullish on markets then it could be of interest down here as it has come back sharply in the recent correction.
That's it for now but back soon with a month end update on the portfolio and the UK market timing indicators.
Just a quick update on the performance of the Compound Income Scores Portfolio (CISP). After such a promising start it was a fairly disappointing month in the end. FTSE 100 and the broader FTSE All Share Index both ended the month with total returns of nearly -2%, while the Mid 250 stocks did slightly worse with -2.24%. As is often the way at the start of a sell off (if that's what this is) the Fledgling & Small Cap Indices held up better with Small Caps flat and Fledgling stocks actually delivering positive returns of 1.83%. The more general weakness seems to have been led by nervousness about rising bond yields on the back of the gradual withdrawal of Central Bank Quantitative Easing or QE being therefore replaced by Quantitative Tightening or QT.
So onto the CISP and its returns for the month of January were similarly drab but were at least just about positive at +0.06%. This compared to the 1.93% loss from the FTSE All Share giving 2% of out performance on the month. Since inception of this portfolio in April 2015 it is now up by 68.8% which equates to an annualised return of 25.3%, albeit that this has been achieved in a very favourable market background. Within the portfolio it was pleasing to see one of last months new purchases - Miton Group (MGR) - coming in as the top performer with a near 20% rise, while Hays Group and Bodycote delivered 11.5% and 6.6% respectively on the back of their updates. On the downside the laggards were Games Workshop (-10%), Jupiter Fund Management (-6.1%) & Bellway (-4.3%) which all probably succumbed to profit taking after previous strong performance.
Personally since I'm be using the Compound Income Scores, together with Stockopedia Stock Ranks more this year to manage my portfolios I was also able to benefit from the rise in Miton Group too. I firmly believe that these quant models can be a great help in identifying shares that outperform, as demonstrated by CISP and other portfolios based on ranking sytems. If you are not familiar with the Compound Income Scores (which have been updated for subscribers today) you can read more about the background to them and how to get access to them if you want by clicking here.
Finally we have the US Unemployment data with the non-farm payrolls today. These should still be fine, while the main FTSE Indices all still remain about 2.2 to 2.4% above their moving averages, with the Small Cap index is nearly 4% above. So these still suggest that we should not be that worried about the sell off just yet, although I guess it could develop into something nasty given valuations and the levels of complacency that have built up over the last few years on the back of QE which meant that corrections were few and far between recently.
Another busy Thursday with a throng of results and updates as the New Year reporting season gets into full swing. Of interest to the Compound Income Scores Portfolio were trading updates from Jupiter Asset Management (JUP) and Hays Group (HAS) the international recruitment Company. While also of interest was a sponsored note from Hardman & Co. on Alliance Pharma (APH) - covering the background and benefits from their recent add on acquisitions which you can read or download from here if that is of any interest, or click below if you want to read more.