Investing Comment |
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Your Money > Investing Comment Articles > Landfill your boots...
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By Richard Hunter, Hargreaves Lansdown
In times such as these, those investors who have not flown the asset class of equities entirely, tend to look towards more defensive shares. Throw in a dose of defensiveness, good yields and even an element of green, and there are a few stocks which may be worthwhile considering over a longer period of time. Furthermore, few stocks could be greener than those which deal with waste management and disposal, and the processing of the ultimate green commodity in the form of water. The current market view on the stocks below tends on the whole to be neutral at the moment - after all, they have each clearly outperformed the market in the recent past. Nonetheless, they have attractions - as any share should have - of solid, reliable earnings and proven products. Stock/index 6 month share price performance Market consensus Dividend Yield Johnson Matthey +29% Hold 2% Shanks Group +11% Strong hold 2.4% Northumbrian Water +21% Hold 3% Severn Trent +15% Strong hold 4.2% United Utilities +9% Hold 6.3% FTSE100 -2% N/A 3.6% (FTSE100 included purely for comparison purposes, not all of the above stocks are FTSE100 constituents) So what exactly do these companies do? Johnson Matthey is a speciality chemicals manufacturer whose activities are divided between three divisions: catalysts (manufacture of automotive catalytic converters, pollution control systems and components for fuel cells), manufacturer of pharmaceutical compounds and refiner and distributor of precious metals such as platinum and gold. Now one of Europe's largest waste management companies, Shanks traces its roots back to the late 19th century when the company began life as a construction concern based in the West of Scotland. Since then, the group has sold its construction businesses and moved into waste management services - including the added diversification of European operations. Also, following on from the agreed acquisition of Biffa by the private equity company Waste Acquisitionco, the group is now one of the few remaining waste management groups listed in the UK - which could also give it some speculative appeal. Northumbrian Water - the company was formed from the merger between Northumbrian Water and Essex & Suffolk Water. However, it still operates as Northumbrian Water in the north east of England and as Essex & Suffolk Water in the South East, and provides a range of services including water collection, treatment, distribution, sewage treatment and disposal. The group's website notes that Severn Trent supplies nearly two billion litres of drinking water per day to over three million households and businesses. Water is supplied via a network of around 46,000 kilometres of pipes and subsequent waste is then processed by over 1000 sewage works. Customers are located from the Bristol Channel to the Humber and from mid-Wales to Rutland. United Utilities was created via the merger of North West Water and Norweb Electricity back in the mid 1990s. The group, which up until recently, had supplied both water and electricity requirements across a population of around seven million people in the North West of England, has undergone a journey which has now taken it full circle. Commencing life on the stockmarket as individual water and electricity companies, a merger into a multiple-utility was then followed by the company branching out into other businesses such business process outsourcing, before coming back to rest solely as a water supplier. Perhaps the products in which these companies deal are not ones to steal the limelight, but nonetheless they remain worth bearing in mind for those investors of a more defensive nature, or ones who consider environmental investments. And, as the table above highlights, it need not always be just the younger, more "exciting" green companies who are capable of providing superior investment returns. Useful links: |
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