Berkeley Homes (full-year results 21 June)
In March, Berkeley Homes announced that profits for the year would be ahead of forecasts, which was a strong update that came hard on the heels of a share buyback plan. The election result clouds the outlook for the UK and while the MPC voted 5-3 to keep rates on hold, a notable shift to the hawkish side, economic weakness and Brexit negotiations make it unlikely that they will hike rates any time soon. Thus the environment for housebuilders remains positive, and even the current easing in price could prove positive as it entices more activity among home buyers.
The shares have rallied since November, hitting a peak of £34, the highest level since February 2016. A pullback in the trend created a good buying opportunity, with a continuation of this move likely to test the downtrend line off the December 2015 high. This would probably also see a test of £34, the May peak. A close below £30.40 would put the price below the June low and also below the level from the March gap higher, a potentially worrying development.
Whitbread (Q1 statement 21 June)
Whitbread faces a much more difficult environment, and investors will have to get used to lower growth rates than the likes that used to prevail, when 23% at Costa Coffee was the norm. Wages are rising, but costs are rising even faster thanks to the weaker pound. Margins are likely to keep coming under pressure, with planned savings of £150 million only going some way to making up the difference.
It is hard to get too excited about the Whitbread chart from a bullish perspective. Despite a strong rally from December, the shares failed in April and then early June to break the £43.33 line that has stymied progress since May 2016. A bounce off the 200-day simple moving average (SMA) at currently £38.92 could see the shares rally once more, but they must break the £43.33 line and also breach the downtrend line off the 2015 highs (which was tested on 1 June and held).