Investment Column: Ignore the noise and order a round of JD Wetherspoon

Standard life; Solomon Gold

Our view: Buy

Share price: 426p (+4p)

JD Wetherspoon used its first-quarter update yesterday to launch a broadside on how Government policies were hitting pub companies. The operator of 833 pubs said that while its sales, profit and cash flow have been "resilient", the main challenges facing the group in the coming months will be the "continuing cost increases resulting from Government legislation, including the carbon tax, the proposed late-night levy and further increases to excise duty".

Wetherspoon pointed out that it made a post-tax profit of £46.8m in its last financial year, but paid total taxes of more than £453.1m, including VAT of £204.8m and excise duty of £120.2m.

However, while these figures lay bare the challenges facing the country's pub groups, the City was far more focused on the group's most recent sales and comments on margins for the 13 weeks to 23 October. And despite the squeeze on consumer spending, Wetherspoon delivered a resilient 1.1 per cent rise in like-for-like sales, although it is likely to have been helped by the warm autumnal weather.

The first-quarter sales growth was ahead of City expectations, but lower than the 2.1 per cent rise over the year to 24 July. But ahead of sales, we believe the impact of rising costs, including utilities, labour and bar, and food supplies, will have a bigger impact over the next year on the group's crucial operating margin, which slipped by 20 basis points to 9.4 per cent in the quarter. Despite having concerns about its margin, we believe Wetherspoon remains one of the pub sector's most reliable stocks.

Its shares trade on an undemanding forward earnings ratio of 11.7 times and offer a prospective dividend yield of 3.1. While we don't think they are set to boom suddenly over the next year, they look well-placed to continue growing. Therefore, we say ignore the Government bashing, focus on Wetherspoon's sound financials and order a round of its shares.

Standard life

Our view: Hold

Share price: 209.5p (+3.6p)

Corporate pensions are where it's at for Standard Life, which has changed radically since it was a rather pompous, Edinburgh insurer that was the favourite of small financial salesmen. So it is a little worrying that its flagship product – Lifelens – was put on the back burner in the third quarter.

The idea is good, offering employees a single web-based point of access to pensions. The trouble with the idea is that its implementation has proved problematic, with the company struggling to integrate client systems with its own. The third quarter sales figures were also hardly good news, being a way below most analysts' expectations.

In the first nine months it generated £15.5bn of total sales, 10.5 per cent better than the previous year. But analysts had been forecasting £15.9bn and it seems that the third quarter has been the problem.

With those horrid three months frightening everyone, that's no surprise. But the sales of corporate pensions were a blackspot, a worry given their importance. They were up 8 per cent at just over £1bn, but that was 8 per cent lower than forecasts.

In terms of earnings multiples, Standard (at 12.6 times forecast) looks pricey compared with its rivals, although the 1.3 times forecast net tangible assets is more in line and the prospective yield of 6.6 per cent is bettered only by Aviva. We're prepared to give Standard the benefit of the doubt – for now. But if corporate sales don't pick soon, we're out.

Solomon Gold

Our view: Hold

Share price: 13.125p (-2.13p)

The mining group Solomon Gold delivered an upbeat assessment of its prospects at its Fauro project in the Solomon Islands yesterday.

The company, which drills for gold, silver, copper and diamonds on the Solomon Islands and in Australia, said it was pleased with the latest results of the exploration drilling at the key Fauro project. In the release yesterday, the company added that it "was encouraged by the recent results" and that the exploration team "is optimistic of further success".

However, despite yesterday's boost, the group's shares continued their downward slide, falling by a further 13.9 per cent last night. This brings the shares decline for the year to about 60 per cent. Furthermore, in the hit-and-miss world of gold mining, the absence of any hugely encouraging news this year has no doubt taken its toll on the share price.

The announcement of Malcolm Stewart Norris as chief executive on 4 October, to replace the retiring Nicholas Mathers, has given the shares a small lift, but it is too early to tell how things will change under his reign. Mr Norris joins from Intrepid Mines, the Indonesia-focused miner. Although we welcome his appointment, the recent weakness in the shares means that we would wait to see what Mr Norris does before adding to our portfolio.

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game