Investment Column: Land Securities needs recovery to motor

JD Wetherspoon; Jupiter


Our view: Hold

Share price: 694.5p (-4p)

Bosses at property group Land Securities have been feeling rather chipper this week. On Monday, work began on the "Walkie Talkie" tower that promises a solid revenue stream, as well as a rather arresting view for Londoners from 2014. Then yesterday they said shopping development One New Change will soon be full of office workers, shops and shoppers.

The comments came in the group's third-quarter interim management statement, which was largely seen as positive. Francis Salway, chief executive, said the plans laid out for the financial year were bearing fruit, with a rise in lettings driving valuation surpluses and income growth. The announcement pointed to progress at Park House on Oxford Street as well as at Trinity Leeds, the largest new development commitment by a real-estate investment trust in the UK since the downturn.

The group pointed to further projects as well as buying opportunities in 2011 to keep investors happy, with talk of 20 per cent rental growth over the next three years. The pipeline looks strong, especially in London, where the lack of office space as developments were shut down during the recession has driven rents higher in recent months. Yet advising on property companies is still a tricky business as the outlook for 2011 remains uncertain.

Analysts believe Land Securities' story in the long term is positive. Matrix Securities has Land Sec on an estimated 2011 net asset value of 752p, a discount of about 7 per cent to the current share price. By contrast, British Land trades on a discount of 1 per cent and Hammerson is about par.

Investors should be pleased with the healthy 2011 target dividend yield of 4.2 per cent, but rival British Land offers 5.2 per cent. In truth, the shares look more or less fairly valued. There should be some upside but it depends on the economy. Worth holding, then.

JD Wetherspoon

Our view: Buy

Share price: 464.7p (+23p)

The value-pub operator JD Wetherspoon raised a glass to strong trading in its last quarter yesterday, as the company brushed off the disruption from the snow. Shares in the company, which operates 786 pubs, surged after it toasted like-for-like sales up by 3 per cent for the 12 weeks to 16 January, ahead of City expectations.

This represented an acceleration from 1.6 per cent sales growth delivered in the previous quarter. Furthermore, Wetherspoon's said the performance of its recently opened pubs remains encouraging and that profit and cashflow continue to be "resilient". So no whining about that winter weather then.

We tipped the company as a share to buy in July at 422.5p and that looks to have been sound advice. Nonetheless, we will stick to our guns, despite a share price jump since then. Wetherspoon's did give warning of rising costs of a wide range of food and bar purchases, as well as its utility bill and the perennially high excise duties. And its shares on a forward-earnings multiple of 13.6 are also not all that cheap anymore. But we believe Wetherspoon's, which will open about 50 new pubs this financial year, is well placed to prosper in a tough trading environment. And with crackdowns to come on supermarkets selling cheap booze, we'd stick with JD and buy.

Jupiter

Our view: Buy

Share price: 305p (-2.4p)

The performance of the two recent fund-manager floats couldn't be more different. Gartmore recently had to be rescued after a succession of disasters, but its chief executive will wave goodbye with £5m in his back pocket.

By contrast, Jupiter has made its investors money as well as its bosses. And how. The shares have gone in only one direction, eschewing the cult of the star manager that brought Gartmore so many problems and Jupiter has done this through a strong ethos and effective management. Its funds also perform well, which make them an easy sell.

Overall funds under management rose by 9 per cent to £24.1bn in the fourth quarter, which beat City forecasts. The company also boasted net inflows of £772m. Interest rates are low, and probably won't rise by much this year with the economy still weak. This makes equity investments popular. Good news for Jupiter. At 13 times 2011 earnings, yielding a prospective 3 per cent, it is no longer a bargain, but those that don't hold the shares already should do so. Buy.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before