WH Smith and RPC

“A 0.3% gain in the FTSE 100 to 7,708 on Wednesday is principally driven by the mining sector which is getting a boost from higher base metal and oil prices,” says Russ Mould, investment director at AJ Bell.

WH SMITH

“People may grumble at WH Smith’s messy shops and excessive pricing on many products, yet this is a business which continues to flourish thanks to strategic shop locations in a large part of its estate.

“It’s no surprise that its travel division remains the growth driver as having shops in airports, railway stations, hospitals and motorway services enables it to benefit from a captive audience.

“People are often in a hurry to catch a flight or a train and so they don’t have time to shop around. They just want to grab something quickly which means WH Smith can afford to keep pushing up prices.

“This practice isn’t customer-friendly, nor is incentivising staff to push extra products at the till like large bars of chocolate, yet it hasn’t stopped people from spending money in its stores.

“Its success has also translated to significant rewards for investors. Anyone buying shares in WH Smith five years ago would have since made a 174% gain which is eight times as much as the FTSE 100 index over the same period.”

RPC

“At first glance full year results from plastic packaging firm RPC look satisfactory with both revenue and headline profit up more than 36%, yet the share price has fallen sharply on their publication.

“Two factors help explain the market’s negative reaction. One is the reliance on M&A activity to deliver growth – organic growth for the period was a mere 2.8%.

“Sentiment towards the company began to sour in early 2017 as questions arose over the company’s accounting policies and strategy of pursuing frequent acquisitions. Notably while full year profit is materially higher, free cash flow fell 4%.

“The other more existential issue is growing regulation of the use of plastics amid concern over their environmental impact. While the company already recycles a lot of plastic, operating profit in the core business is expected to grow more slowly than in recent years.

“The £50m improvement targeted by 2021 is significantly less than the profit jump posted for the financial year just reported.”

These articles are for information purposes only and are not a personal recommendation or advice.