ReallyVeryFoolish wrote:
Well, Johnson Matthey (JMAT), a high quality company of the type I like. Previously too expensive for me with too low a yield.
Tipped in a number of places prior to Covid19 at prices about 50% over Friday's price - PE <9, historcially low - Well covered (backward looking) yield ~2.5x covered - Previously a low yield stock, now ~4.5% on last years numbers - If they keep paying of course - Excellent environmental products portfolio looking towards the 21st century - Significant technology moat - A quality recovery share? Tempted? (I am, but I have no spare cash to invest unless I sell something).
I've had my eye on JMAT for a while during this pandemic, given the large share-price drop, but I'm currently unsure of a purchase before their full-year results on 28th May are released.
They released a pre-close trading update on the 30th of March that clearly stated that they were being negatively impacted by the Covid pandemic -
Whilst there is significant ongoing uncertainty around the full impact of COVID-19 we are taking steps to manage our costs and cash flow. We have a high quality, resilient and diverse business portfolio; a strong balance sheet and good access to liquidity, and are further strengthening our financial position.
In 2019/20, we have made good strategic progress and were on track to deliver results in line with market expectations this year, prior to developments with COVID-19. The ongoing pandemic has led to a deterioration in some of our end markets and consequently we now expect to deliver group operating performance below market expectations.
https://www.investegate.co.uk/johnson-matthey-plc--jmat-/rns/johnson-matthey-pre-close-trading-statement/202003300700079555H/
Clearly the share price drop of around £30 down to the current £19 takes much of the above uncertainty into consideration, and I'm tempted to take a few nibbles over the coming weeks in anticipation of the 28th May results, but I'm really posting to say that one of the primary reasons for my own initial interest was the current yield of around 4% as well, but that would clearly be based on a legacy dividend that is likely to come under pressure, at least in the short to medium term, so this would be a longer-term yield-play for me, with some real potential for medium and long-term capital growth.
Not that this would put me off at all, and I do like to have a couple of these types of play in my portfolio at any given time, and there's currently a 'spare slot' for just this type of opportunity, which is why JMAT has piqued my interest - it's just that I mention it in passing as I'm currently assuming that the dividend will either be cut completely in the next set of results, or at the very least, it'll be at a much lower level than they've delivered in the recent past..
Cheers,
Itsallaguess