National Grid Share Discussion Threads

[jonnycash1] 05/4/2018 16:27

Just that the majority of the talking heads believe inflation is just around the corner but the facts don't bear that out at all. All we have seen is the impact of a collapse in sterling and the dollar which feels like real inflationary pressure...but real inflation is driven by wage growth, or a severe lack of supply, and we have neither despite a very high number of people in employment both here and in the US. It's an unprecedented economic conundrum and a lot of the normal drivers of supply and demand are not factoring into the economy as they have historically. I think the impact of the internet is not being factored in to modern economic theory. Take a real example...over Easter you could buy a lean to 15 X 10 foot conservatory for £4333. Was that more expensive ten years ago? What about twenty years ago? Because to buy my conservatory I can look everywhere at the click of a button. Factor that in to the inflation argument...there was an article in the FT about Why is there no inflation? Last year that showed the real prices of things now V years ago. Everything can be bought cheaper now. So where is this inflation going to come from?

[action] 05/4/2018 12:27

900p will do me fine.

[haughtonhoney] 05/4/2018 12:04

johnny - can you explain why the following piece of your previous post is important please (for us thickos)?"QE is going to end. Growth is lacklustre. Wages are not rising in a meaningful way. The prices of the majority of items show rapid deflation. Internet has not been factored into the economics."

[bountyhunter] 05/4/2018 11:32

note the gilt long term chart comparison in the header; not correlated throughout 2017 (due to political factors taking precedence in my view) but realigning more recently

[jonnycash1] 05/4/2018 10:16

This stock is extremely sensitive to US government bond yields and to a lesser extent Gilts. If you keep an eye on the 10 year Treasury yield you will see the correlation. As gilt prices rise and yields fall a lot of pension funds switch into this stock. Hence it's been very low in anticipation of the 30 year bull run in fixed income coming to an end. But that is not happening at the moment, Despite promises from Fed and BoE of rate rises, traders are not buying the currencies. QE is going to end. Growth is lacklustre. Wages are not rising in a meaningful way. The prices of the majority of items show rapid deflation. Internet has not been factored into the economics.

[gutterhead] 05/4/2018 09:48

Looks like a break out. Could get to 900p quickly imo

[action] 05/4/2018 09:15

R v out of bear hug.?

[losos] 04/4/2018 17:43

UtyINV - "JP has plenty time to woo the City and undertake some wheeler dealing but he appears to have gone back into his shell."

Let us hope that he's just being cautious, these days it's so easy to get caught out by the media with an 'off the cuff' remark.

Even after the special dividend this is still my biggest holding. I was going to top slice but am thinking of staying put, at least until there are more indications of the looney left gaining power. Hope to have snuffed it before that happens haha.

[utyinv] 04/4/2018 10:26

wskill,

I agree with what you say especially the US business element, but I believe JP can do more.

Steve Holliday was always touting the City, plugging prospective future success. JP appears to hide behind investor services and only goes public at interim and finals.

He is a nice guy but in his previous role under Holliday he was more dynamic and built confidence into the business. Don’t forget, the CEO has a team of senior Directors who run the business according to policy set by JP and his Board. JP has plenty time to woo the City and undertake some wheeler dealing but he appears to have gone back into his shell.

Just my observation and my opinion only.

Let’s hope there is some good news in 6-7 weeks time🤞

[wskill] 04/4/2018 08:13

Happy to have the share price at this level to reinvest my dividends from my SIPP I am diverting all the income produced into NG. and PNN at these prices dividend yield of around 6% is not to be sniffed at these days.

Manipulation is the name of the game with the hedge funds sadly they are good at it as well .
Cannot fault management with their strategy the majority of the business is now USA based it will preserve the company in the very unlikely rise to power of the Marx brothers.

[utyinv] 03/4/2018 21:57

Oversold? Small rise tomorrow.

However, overall IMO this share is being manipulated. The share should be pushing £9. I said back in Nov that we will see if John Pettigrew’s Strategy is working as the second half produces the majority of NG’s income. I know many who reinvested the special divi at £10.50 ish and many will be questioning if Pettigrew is doing enough?

[utyinv] 02/4/2018 22:50

I expect it will open 4-5p lower due to the ADRs in the US.
Hopefully it will recover as the day continues🤞

[jonnycash1] 29/3/2018 08:59

David puts it best...THERE IS NO INFLATION. WE'VE BEEN TELLING YOU THAT FOR AGES. THERE IS NO INFLATION.

[abbotslynn] 28/3/2018 21:38

Nice intra day rise

[bountyhunter] 28/3/2018 21:30

I assume you mean no increase in inflation at the moment rather than no inflation.
Interest rates are of course rising - lead by the US - albeit very slowly.

[jonnycash1] 28/3/2018 19:45

The political factors and the fact there is no inflation are the reasons I bought in.

[bountyhunter] 28/3/2018 17:32

the utilities have a lot of catching up to do if/when we can discount the political factors...

[jonnycash1] 28/3/2018 16:50

US treasuries broken key level below 2.8% as investors rusk to safe havens following tech market rout. So a hunt for yield basically, on fears the bond rally will resume.

[bountyhunter] 28/3/2018 16:09

the utilities in general seem to be doing very well today (for a change!)
- defensive qualities or a weakened JC?
...probably a bit of both

[dr biotech] 28/3/2018 14:27

This and GSK are my two of my three largest holdings. The last couple of days have turned this month into a poor one rather than a dismal one. Am grateful for small mercies..

[tim 3] 28/3/2018 14:12

I would also think that if Corbyn were to try and re nationalise NG it would get very messy with legal challenges all over the place.

[utyinv] 28/3/2018 14:03

Nice to start reading positive publications (mind you they are known to change their tune.... often :) )

Is the National Grid share price the bargain of the year?

The National Grid (LSE: NG) share price has dived 30% year-to-date and is now more than 35% off its all-time high printed in mid-2016, excluding dividends.

However, despite these declines, the National Grid business is still powering ahead. For the six months to the end of September, adjusted operating profit increased by 4% to £1.4bn. That being said, on a statutory basis, earnings per share for the period declined 12% year-on-year, and for the full-year, analysts are forecasting earnings shrinkage of 5.3%.

Still, in my opinion, a 5.3% decline in earnings does not justify a 30% decline in the value of the shares. Indeed, even after factoring-in the earnings decline, the shares are now trading at their lowest valuation in six years.

The bargain of the year?

With a dividend yield of 6.2% on offer, the shares certainly look appealing for income investors, but the critical question is, what’s behind the recent share price decline?

As my Foolish colleague Edward Sheldon recently pointed out, there are currently three significant threats overhanging the company. These include the danger of renationalisation if Labour leader Jeremy Corbyn gets into power, action by power regulator Ofgem, which has promised its “toughest̶1; ever crackdown on energy network profits, and rising interest rates.

Of these three headwinds, in my view, investors only have to worry about the prospect of renationalisation. Indeed, Ofgem’s new price controls, won’t come into force until 2021 and the firm is working flat out to increase its exposure to the US to offset stricter regulation here in the UK. Almost 50% of revenue now comes from the US. This division is growing much faster, with profit rising 19.2% for the half year to the end of September to £526m compared to an 11.5% fall in operating profit at the UK electricity transmission business to £540m. The company spent twice as much (£1bn) investing in its US business than in the UK during the period.
Meanwhile, higher interest rates have resulted in investors selling off ‘bond proxies’ like National Grid as they hunt for income elsewhere. So, to some extent, this issue is cosmetic. The company will have to grapple with higher interest rates on its debt, as well, although management should have already provisioned for rising rates.

The biggest concern

When it comes to the threat of renationalisation, it is impossible to say today how much compensation investors will receive if a Labour government takes over the business. That said, what Corbyn says and might do are two different things, and he may never actually get into power. With this being the case, I’d say the risks are skewed in the firm’s favour. What’s more, there’s already plenty of bad news baked into the National Grid share price.

So overall, while some risks are overhanging the shares, I believe that on balance, the group’s 6.2% dividend yield is worth the risk, especially considering the company’s monopoly position in the market and valuation of 12.7 times forward earnings.

[andyj] 28/3/2018 13:53

I think you have. Utilities in vogue today and coming under sustained buying. Looking very promising for a trend reversal.

[jonnycash1] 28/3/2018 12:12

resistance at 787p Be nice to close over that for 3 days running.