I don’t know why I bought Astra Zeneca in July 2010, maybe for the yield, but I did. The shares were about £32. The following summer they were £30 so I topped up. Since then it has been a bumpy ride but now they are circa £72 with a P/E over 25 and yielding 3%. Yesterday I sold the lot and did something I never thought I’d do.
I’ve bought shares in a company that derives its profits in the UK; its shares have fallen 53% over the past five years; it will take a Brexit-beating; it is so unloved that it is about to drop out of the FTSE 100. You guessed? Spot on, it’s Marks and Sparks. Even Top Shop Sir Philip (can’t take your call, on yacht in Monaco) Green is feeling the heat. High street retailers are so out of fashion.
Because I don’t invest in individual companies I don’t look, so I’m grateful to Merryn Somerset Webb for pointing out in WeekendFt this favourable alignment in the financial firmament. The P/E is 8 and the shares yield 7%. They may take a further Brexit buffeting. They may cut the dividend. They will not do well under a Corbyn government; but as they are in the bargain basement I think they are a good bet. M&S doesn’t quite make the golden rule: FTSE 100, single figure P/E, double digit yield but it’s close enough. That rule has served me well with British Gas and Shell.
Talking about Marks and Sparks reminds me of the worker on a building site who kept putting his gumboots on the wrong foot. His supervisor helped him by marking them L and R. “Ah, so that’s why me missus has C&A on her knickers.”
The last or bottom paragraph of today’s blog reminds me that M&S sell remarkably good undergarments, knickers especially. Last forever. I wish you luck with your shares and trust that the new director/ directors in ladies’ fashion get their act together. Earlier in the year, a new style of jeans would have sold in their millions (almost) had M&S not under-ordered from their supplier. Heads rolled, I believe.