Building materials group lifted by positive note from BarclaysWolseley is bucking the current downward trend in the market, following a positive note from analysts at Barclays.The building materials group is 48p better at £41.69, while the FTSE 100 has edged lower, now down 16.45 points at 6693.65. Strong warnings from the Bank of Greece about an uncontrollable crisis if the country left the eurozone has increased investor nervousness, while there is also uncertainty ahead of tonight’s Federal Reserve comments on US interest rates.Wolseley’s US chief executive, Frank Roach, attended our European Select conference last week. We learned that the company believes its US markets will grow in a 4%-6% range, is confident it will keep on outperforming the market, that margins should continue to climb and that there is healthy pipeline of acquisitions. We leave our underlying forecasts unchanged but believe there is potential for the US business to beat our estimates in the coming years if the strategy to drive profitable gains in market share continues to be successful. Wolseley is our top pick as, even in our base case, we believe the business will deliver 11% 2015-2018 earnings per share compound annual growth rate, plus a 2.4% 2015 dividend yield and around 4% from capital returns/bolt on acquisitions. The valuation of 15 times 2016 PE screens well across the sector for this level of growth. Continue reading...
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