The FTSE 100 has gone on a tear just as the deadline for using this year’s Stocks and Shares ISA allowance looms. So is there still good value out there? Happily, I think there is.
As with any rally, some shares refused to participate. That applies to one of my favourite portfolio holdings, wealth manager M&G (LSE: MNG).
While the FTSE 100 as a whole is up 2.51% over five days, the M&G share price is down 3.82%. However, this follows a strong run, with the share price 20.27% higher than 12 months ago.
Still bargains out there
It’s impossible to discuss M&G without mentioning its blockbuster trailing yield of 8.31%. If that’s sustainable, I’d double my money in less than nine years, even if the share price did not rise.
Investors gave yesterday’s 2023 results a lukewarm response, even though it turned last year’s £2.1bn loss into a £309m IFRS profit after tax. Net client flows, adjusted profits, and operating capital generation all rose.
The board only increased the dividend 0.1p to 19.7p per share, which suggests I may not see much dividend growth in the next few years. Given the high yield, I can live with that. I can happily top up my holding at today’s 2024 valuation of just 10.4 times earnings, without wishing I’d done it a week ago.
I bought a small stake in pharmaceutical firm GSK (LSE: GSK) as a long-term defensive buy and hold in January, and I’ve been wondering whether to buy more. I don’t have to worry about the share price being inflated by the recent rally, it’s down 0.83% over the last week. Over one year it’s up a solid 17.21%.
GSK is still in recovery mode after a bumpy few years, when the company hived off consumer healthcare division Haleon, without finding fresh direction of its own.
I hope they play catch up
Its moment seems to be edging closer, as a growing stream of positive drug trials raise hopes that its pipeline will finally start to replenish. It’s no longer the dividend hero of yore, with a modest trailing yield of just 3.44%, but I’m hopeful that will pick up over time.
Trading at 10.79 times earnings, GSK is still cheap. Developing new treatments is a tricky, long-term process, but I expect GSK to reward my patience over the long run. I’m ready to buy more.
I don’t own shares in FTSE 100-listed pest control specialist Rentokil Initial (LSE: RTO), but I’ve been considering them for months. I missed my chance before full-year results on 7 March showed adjusted pre-tax profit jumping 43.8% to £766m. The share price rocketed almost 15% in a single day.
This helped reverse much of the damage done in November, when Rentokil warned profits were coming in “marginally below” expectations, amid slow growth in the US.
The share price has shunned this week’s excitement to trade 0.5% lower. It does look a little pricey though, trading at 20.54 times earnings, while the yield is a meagre 1.84%. I’ll keep a watching brief on Rentokil. I would like it to be a bit cheaper, to be honest.
That’s not a problem with GSK or M&G, which both look good value to me. I’m keen to buy before they start rising, too.
