Interactive Investor

Insider: two FTSE 100 winners tipped to keep rising

20th February 2023 08:04

by Graeme Evans from interactive investor

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They’ve already delivered big profits for shareholders, but directors at these companies are still buying up shares. Our City expert also reports on bargain hunting at a well-known small-cap.

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Two of the FTSE 100’s top performers of 2023 have been backed to go higher after directors at B&M European Value Retail SA (LSE:BME) and Whitbread (LSE:WTB) spent a combined £100,000 on shares.

Thursday’s move by B&M director Oliver Tant was made with shares at 485.8p, some 17% higher over the year to date. The price also represents a rise of 64% since mid-October, making the retailer the fourth best performing stock in the ascent of the FTSE 100 to 8,000.

Whitbread non-executive director Dame Cilla Snowball acted on Wednesday with shares at 3,077p, 19% higher in 2023 and 30% stronger than the price in the autumn.

The pair’s shares closed last week at 486.6p and 3,110p respectively, but analysts at Deutsche Bank have a price target for B&M of 580p and Liberum believes the shares of Whitbread have the potential to hit 3,740p.

The bigger of the two insider purchases was made by Dame Cilla, who marked her recent appointment to the board of the Premier Inn chain by spending £69,500 on shares.

She was chief executive of Diageo and BT ad agency Abbott Mead Vickers BBDO between 2006 and 2018 and made a Dame in 2017 for her services to advertising, diversity and equality.

Her purchase was made a week after fellow non-executive director Fumbi Chima, the chief information officer of the not-for-profit credit union BECU, made a purchase at 3,108p.

Their support comes after Whitbread reported UK accommodation sales 24% ahead of the previous year, with demand well-balanced between leisure and business as well as London and the regions.

The update led Liberum to raise its profits forecast for the financial year by £71 million to £392 million and to lift its price target from the 3,320p seen previously.

Whitbread’s exposure to the UK and German economies and its asset-heavy model meant the stock underperformed significantly last year. However, growing optimism for a more resilient operating year means a recovery for shares has accelerated at the start of 2023.

Bargain hunting

Deutsche Bank is increasingly positive on B&M after upping its price target by 26% to 580p and naming the discount chain as one of its favoured picks in UK retail, alongside Marks & Spencer and Primark owner Associated British Foods.

A further market share boost as budget-focused consumers continue to trade down and a proven ability to manage operating cost inflation are among reasons for the support.

The bank expects store expansion to accelerate in the UK and France and also highlighted the impressive cash flows that led to the 3 February payment of a 20p a share special dividend.

Liberum, which has a target price of 685p, added recently: “We expect B&M to deliver a resilient performance over the coming months, especially in an environment when consumers’ wallets continue to be squeezed.”

Last week’s purchase of shares was the first by Oliver Tant since he joined the board as a non-executive director in November. He was chief financial officer of Imperial Brands between 2013 and 2021.

A not so super stock…yet

Chief executive and founder Julian Dunkerton continues to increase his Superdry (LSE:SDRY) stake after picking up another £381,000 worth of shares in dealings disclosed on Friday.

The latest purchase took place at 111.8p and followed two other investments worth more than £400,000 at prices of around 120p a fortnight earlier.

The buying comes in the wake of half-year results at the end of January, when Superdry reported strong trading in its store estate but still downgraded profit hopes due to the underperformance of its wholesale operation.

Dunkerton said: “We don’t expect market conditions to become easier any time soon, but with a new financing package in place and the brand in great health, we approach the year ahead with optimism.”

The company has 219 stores and around 450 franchisees and licensees, with operations in over 50 countries and more than 4,100 staff. Dunkerton returned to the helm in April 2019 and has been linked with a move to take Superdry private, although a recent stock market statement confirmed a comment there are “no plans to do this at the moment”.

Superdry’s recent breakeven guidance, which compared with previous hopes for a profit of between £10 million and £20 million, unwound an earlier rally that had taken shares from 96p to 165p in the month up to mid-January.

The shares had been as high as 300p in November 2021 and 500p in 2010’s £400 million stock market listing. They closed last week at 117.4p.

Liberum has a target price of 500p, adding that the brand is resonating well with the consumer. The broker said: “Cash generation is good, new banking facilities are in place and aside from wholesale the rest of the business and strategy is well on-track.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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