Investment Column: Stay put at Rightmove despite the slump

Henderson; Spirent


Our view: Hold

Share price: 1,039p (-27p)

Further evidence that the housing market remains lodged in the doldrums came from the Nationwide report on house prices yesterday. After rising by half a percentage point in March, Nationwide's house-price index slipped by 0.2 per cent in April.

In annual terms, prices were down by 1.3 per cent. And although recent mortgage-approval figures suggest housing-market activity may be edging off lows, the picture remains uncertain. Besides, in historical terms, the flow of credit remains fairly thin.

All this argues against investing in house builders and though there will always be exceptions, we remain cautious on the whole. That said, there are ways to play the housing market – and the property website Rightmove is one of them.

The company, which charges estate agents for listings on its ever-more popular web pages, boasts an enviable position in the online property sector. For many, it is the first port of call when it comes to searching for rentals or for places to buy. This trend will accelerate as would-be buyers seek to make the most of their limited ability to borrow by bargain-hunting.

Yesterday's interim management statement showed that the site continues to attract more and more visitors, with page impressions up by 15 per cent in annual terms over the first three months of the year. Searches on mobile devices were "over 200 per cent higher" in the same period.

Still, like a nervous home buyer, the valuation gives us pause for thought. Rightmove trades on multiples of nearly 25 times forward earnings, says Altium, which last night lowered the stock to sell for that reason.

However, though we agree that the shares aren't exactly cheap, we do not think the multiples are so prohibitive as to warrant such a bearish stance, particularly in light of the strength of the business. Don't move out yet.

Henderson

Our view: Buy

Share price: 156.6p (-4.5p)

Henderson Group's first-quarter trading statement had no real surprise for investors yesterday. Assets under management of £60.5bn at the end of the period were 1.9 per cent down from the quarter before, but the main reason was the planned £1.5bn transfer of cash funds to Deutsche Bank's DB Advisors.

In the volatile markets of the first quarter, that performance was solid with decent flows into the company's absolute return funds and retail funds.

The main news was that Henderson is pressing ahead strongly with integrating Gartmore, the rival manager it bought last month. All staff at Gartmore – which nearly collapsed after one of its former star fund managers left amid an investigation by regulators – are working on Henderson's systems and the pace of integration is ahead of management's expectations. Gartmore had £1.2bn of net outflows during the period – an encouragingly low rate – leading to Henderson taking on £15.7bn of assets.

Royal Bank of Scotland analysts have the combined group trading on 12.9 times its forecast for 2011 earnings compared with a mid-cycle margin for listed asset managers of 15 times. That leaves scope for the Henderson to continue attracting new funds, to outperform expectations on fund outflows from Gartmore and to reap the benefits of the merger. Buy.

Spirent

Our view: Buy

Share price: 135.8p (-5.6p)

Few punters outside the industry may have heard of Spirent, the UK telecoms-testing group, but its clients include big names such as Alcatel Lucent, Verizon and Cisco Systems.

The group put out its first-quarter numbers yesterday, which revealed pre-tax profits had risen by over a tenth, driven by demand for its services. Reported operating profit rose by 10 per cent to $23.7m (£14.4m), while revenues were up 14 per cent to $122.8m.

Not only that, the group is increasing investment in product development "to meet customer demand", and group order intake was up by 5 per cent. Chief executive Bill Burns expects the solid run to extend to the end of the year citing customer demand for testing "to enable the development and deployment of new technologies that drive the ever-evolving communications industry".

The results were pleasingly ahead of analysts' expectations, and the group has strong confidence for its performance into the medium term. Numis has Spirent on an ex-cash price of 16 times estimated full-year earnings which it said "feels like growth at a very reasonable price". We agree. Buy.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Chelsea are interested in loaning out Romelu Lukaku to Everton again next season
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
people
Extras
indybest
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?