Image source: Getty Images
Global markets rallied this week as fears of a US recession eased. Since the risk situation now feels much calmer, I revisit the others FTSE 100 stocks I was reluctant to buy.
GSK
I've been obsessed and wanting to buy GSK (LSE: GSK) has been an inside joke to me for a long time now. I will probably be in the age bracket of 50-59 that its Arexvy the vaccine was just approved before I finally bought it!
It is one of the few mega-caps in the FTSE 100 that has managed to escape my profile so far. But its latest Q2 results put it firmly back in my crosshairs.
The July 31 report revealed sales rose 13%, a 5.2% improvement on analysts' expectations. Subsequently, core operating profit increased by 18% and earnings per share (EPS) increased by 13%. The future return on equity (ROE) is now predicted to be 39% in three years.
It's a promising option – but one pressing concern can hinder progress.
GSK symbols Zantac The drug remains the target of several thousand US lawsuits alleging a link to cancer. Without one Illinois judge ruling that the drug is not guilty in a particular case, the remaining trials in other states could drag on for years. If found guilty, compensation payments can cost the company a lot in the short term.
Still, I think it will make a good long-term investment in my portfolio. So I plan to finally buy the stock next week.
Have fun
On the other side of the scale Have fun (LSE: ENT), one of the smallest stocks in the index. It hasn't been on my radar for as long as GSK but it caught my eye during the recent Euro soccer tournament. As the parent company of Ladbrokes, it is no surprise that increased betting activity has boosted revenue.
It also recently posted interim results for the first half of the year, with stronger-than-expected winning margins in the Euros. Revenue increased by 6% and EBITDA increased by 5%. The share price rose 9% on the day of the announcement.
The sports betting and gambling company has had a rough few years. As of September 2021, shares are down more than 70%. Several acquisitions made under former CEO Jette Nygaard-Andersen did not help its fortunes and left the company £3.7bn in debt. Inflation-weary consumers with tight wallets are likely adding to the woes.
Now that it's fixed, can the company benefit from a stronger economy? The looming threat of recession has certainly made me shy away from overspending this year. If we're being honest, a few small wagers couldn't hurt, right?
However, recession or not, Entertain still faces challenges. A decrease in profits means that it has recently become unprofitable, with negative earnings per share (EPS). Despite this, it was confident enough to increase Q2 dividends to 9.3p from 8.9p. If that bet doesn't pay off, it may have to be cut again – a bad look.
In addition, the company is still looking for a new permanent CEO – which gives me pause.
While this low price point is attractive, I would wait until management is more stable before deciding to buy the shares.
Source link
