A UK stock I’ve purchased for January

This post is just generally not that exciting. Its more for my own purpose on why I’m buying this stock so I can look back in the future. Hays ticker LSE:HAS. As normal I will analyse each section of the company and give it a ranking. This ranking will then be converted to a percentage on whether its a good buy.

Hays is the a global specialist recruitment group, and a market leader in places such as the UK, Germany and Australia. They are experts in recruiting qualified, professional and skilled people across a wide range of specialised industries and professions. They operate across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments. Its market cap is £2 Billion.

Hays current price has recently came of a 52 week + low at £1.36 . The last time it was this low was back in 2016. The current price now is £1.40. Rank 10

Intrinsic value:

The intrinsic value is £1.91 which gives the current price of £1.40 at a sale of 27%. This is a mild discount with a rank 10.

P/E : 12.2 This is good value based on earnings . Rank 10

Annual growth and earnings:

Future growth in earnings is expected to be 9.3% with the revenue at 5.7%. Over the last 5 years earnings have been 15.8% and revenue 19.2%. Hays has exceed it its expectations in the past and the future is still showing a steady growth. Rank 10

Balance sheet:

It current net worth is £700.50 m and this and been steadily rising as in 2012 its net worth was £190.60m. As regards debt then it has none. It has had debt in the past but has steadily paid it all off while growing the company. 5 years ago its debt was at 67%. Rank 10

Dividends:

This company pays an amazing 6.29% and its expected to increase to 6.6% this year 2019. Over the last 10 years the dividends have increased and the current payout ratio is only 33% Rank 10

Management:

The tenure time is longer than 5 years and this suggests they are a seasoned and experienced team. Rank 10 but with some board directors selling stock recently this will drop the rank down to 5.

Conclusion :

The overall percentage to buy is an impressive 89.24%. I’m happy to buy this stock

A stock for January 2019 for UK investors.

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This blog is part one of a few stocks that I’m researching in the UK stock market to possibly invest for the coming New Year.

Each section of the stock has been given a rank with either a 1 for a sell, 5 for a hold and 10 for a buy. This is then converted to a percentage on whether its a good buy. This ranking method is completely my method and I’m not saying its right or wrong , though its does help to keep track of stocks I own or ones I’m researching.

Legal and General is on the London stock exchange with ticker LGEN.
Its a British multinational financial services company headquartered in London, United Kingdom. Its products and services include life insurance, general insurance, pensions and investment management. With a market cap at £13B.

Value:

Its current market share price is £2.24 and is at a 52 week plus low, with an intrinsic value (based on future cash flows) at £4.41 per share. This gives a discount of 49% and makes it a fair value to buy. Ranked 10

Price per earnings:

Its P/E is 8.2 (£8.2 an investor is willing to pay for £1 of current earnings). This is a very reasonable level and below the market average of 14.7. This suggests the company has room for growth and is not overvalued. Ranked 5

Growth and Earnings:

Over the coming year LGEN is expected to have an annual growth in earnings of around 2.7% with a revenue growth at 12.6%. Both of these are positive, with the growth revenue exceeding the average for the UK. While both are positive neither are high growth. The past though has been even better. Over the last 5 years it has produced 14.7% on earnings as an average, and this last year it was 15.5%, again both very positive. Ranked 5

Net worth and debt:

This has been quite a roller coaster of a ride with debt at one point in 2017 at £32,128.00m and equity at only £7,565.00m. Its net worth has increased moderately over the last 5 years from £5,122.00m to today’s net worth at £7,778.00m. Whats more impressive is that while its debt is 57.2% it has been reducing its debt and the company is very much solvent. Over the last 5 years its debt has been coming down.
Debt is well covered by operating cash flow (133%, greater than 20% of total debt) .Interest payments on debt are well covered by earnings. Ranked 5

Popularity :

This is not very technical at all. Its just noticing whether the stock is currently really popular , for example Bitcoin (though not a stock ) was extremely popular a few months ago and since then its crashed. If its over popular and people just cannot stop talking about it this would be ranked a 1. Ranked 10

Dividends:

Very good dividends at 6.59% and have increased over the past 10 years. Dividends are very well covered and the payout is only 57% of earnings. Over the next three years its expected for the dividends to increase an the payout to raise to a reasonable 62%. Ranked 10

Management:

The current management team seem well balanced with one board member having served 19.9 years so far. Ranked 10

Insider trading:

If members of the company are buying their own company shares then this gives confidence that the company is happy in its operations for can see a bright future. Sometimes something so simple can give a great insight into a company. Over the last 12 months there has been a lot of inside buying and no selling , from board members to the chairman. Ranked 10

Conclusion:

This seems a good company to buy into with a good history and stable future. I do not own any of this company stock as of yet . The total score as a percentage came out as 81.25% buy which is good. The downside to the company is its slow growth rate for the future and its debt is still over 40%. If the company carries on paying down its debt then this will increase its popularity which in turn will increase it share price. Legal and General is a house hold name throughout the UK and there is no reason to suggest a downside to the company as insurance will always be needed.

Thank you for reading this and I Wish you a Happy New year.

Kind regards