Don’t tar JD with the same brush

Oct 6 2008 by Iain Laing, The Journal

Retailer JD Sports (300p) recently posted profits that were well ahead of expectations, like-for-like sales growth touched 6%, while margins improved and costs were kept firmly under control. The company has shifted towards the fashion end of the sector and has positioned the business so that its customers are rather less exposed to the economic downturn than those of some of its rivals.

With the company hopeful of great things from the acquired Bank chain last year, there is significant potential for the company to do even better.

The City is expected to upgrade its profits forecast for the full year in the weeks to come and the changes are expected to leave the company trading on a miserly 4.4 times this year’s earnings.

It is true that the coming Christmas trading season is likely to be one of the most savage for years for many high street names, but JD doesn’t deserve to be lumped in with other, less robust companies. Buy.

MAIL ON SUNDAY

Primary Health Properties owns 112 modern healthcare centres which are let out to GPs alongside pharmacies and dentists. The leases are extremely long, averaging 19 years, and 90% of the rent is paid by the Government.

Its assets are valued at £350m, but managing director and founder Harry Hyman would like to triple this to £1bn by 2014 or earlier. The group has money in the bank and does not need to renegotiate loan facilities for another five years. Its loan to value ratio is a relatively conservative 62%.

PHP shares are 280p, having been more than 350p this time last year. The fall seems unjust.

The company is well financed, well managed and extremely reliable. For investors seeking income and security, this is as good as they get. Buy.