Investing prior to company announcements can be risky if expectations are high, but potentially lucrative if they are too low. Today, I’m asking whether I’d consider buying three FTSE 100 value stocks before they report in November.
Loss of momentum
It’s been a rollercoaster year (so far) for BT (LSE: BT.A). Having started 2023 at around 115p, the share price had rocketed to 160p by April.
Unfortunately, those gains have evaporated and a fresh 52-week low was recently set. And I doubt interim numbers — due on 2 November — will kick-start a revival.
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While earnings are likely to have remained stable, the big dollop of debt on the balance sheet isn’t ideal in the current economic environment. Nor do I expect it to fall dramatically, due to huge investment in BT’s 5G rollout. The potential merger between Vodafone and Three is also worrying.
Yes, a price-to-earnings (P/E) ratio of six does look very low at face value. BT stock also boasts a forecast dividend yield of 6.7%.
With no clear and immediate catalyst for growth however, I wonder if the share price may drift. Considering that so many other UK stocks look like bargains relative to their quality, I simply can’t get enthusiastic about buying.
‘ReMarksable’ gains
Another value stock updating the market is Marks & Spencer (LSE: MKS).
Unlike BT, investors here have enjoyed a sustained revival in the share price in 2023. As I type, the stock has climbed just short of 70%. Go back a full 12 months and it’s doubled.
Could the shares go even higher when interim numbers arrive on 8 November? Well, the valuation still feels pretty attractive. Right now, this stock changes hands at a little under 12 times earnings. Confirmation next month that dividends are being restored will also go down well.
On the other hand, we know British retail sales fell more than expected in September as shoppers held back from buying warmer clothing. A recent survey conducted by PwC also suggests that almost one in three adults expects to spend less on Christmas this year due to the cost-of-living crisis.
As such, there’s at least a chance that the superb momentum we’ve seen won’t continue.
All things considered, I’m more positive about M&S than I once was, but it stays on my watchlist for now.
Down, but not out
A third top-tier firm reporting next month is housebuilder Taylor Wimpey (LSE: TW).
Now, I probably don’t need to whip out a crystal ball to predict that recent trading hasn’t been stellar. Galloping interest rates have crushed demand from buyers and sent house prices down.
Perhaps in anticipation of some nasty numbers, the shares have tumbled 13% in the last month.
However, this does leave them trading at a price-to-book ratio of 0.83. That already looks cheap relative to the market. There’s a forecast dividend yield of 8.8% in the offing too.
So would I buy today? Probably not. I already have sector exposure via Persimmon. I’m also wary of a negative reaction if that dividend was cut.
Even so, I’m bullish long term thanks to the ongoing shortage of housing in the UK. For this reason, I think slowly building a stake after next month’s statement (9 November) could work out well.
