Centrica PLC (ADR) (OTCMKTS:CPYYY) closed at the end of the last trading session with a minor loss of 0.98% but it still was an extension of the short term decline following the intermediate rally. The volume of the day at 506,000 was many times higher than the daily average of 90,000. The volume has surged in the last few days, a natural phenomenon seen in a bear market when a decline invites much more volume than a rise. To extend the intermediate bounce, the stock has to first break above $16 levels, above which the long term reversal area around $18 waits.
Directors have been splattering the funds at Centrica PLC (ADR)(OTCMKTS:CPYYY), and it evidently raises a question should investors follow the lead and load up on company’s shares? There have been no trading updates from company since half-year result announcements in July 2015. The company witnessed a strategic assessment under CEO Iain Conn, who was elected earlier this year. The plan now is to focus on customer-centric businesses, to lower and restrict scale in oil & gas E&P, and to exit from wind joint ventures.
The share price of Centrica has moved south on the chart since the company reported its financial numbers in July. On the same day, the directors of Tesco reported buying of shares in their company. The CEO of Centrica purchased 100,000 Centrica shares, while non-executive Director Mr. Steve Pusey picked up 20,000 CPYYY shares. Both directors compensated 235.35p a share, for a total cost of £282,420.
Centrica offers a potent mix of stability, growth and income at the present time. As of now, the company’s shares yield a very tempting 5.1%, even after Centrica rebased its dividend payout by 30% earlier in 2015r. This indicates that its shares are going to feature a strong support level since payouts are well-covered and demand from investors wanting sustainable income plays is likely to remain high, particularly with interest rates likely to grow at a tepid rate.
The future ahead
Centrica is expected to be a very different entity in coming years than it is today. It is planning to sell off its gas and oil assets, with its new management considering that Centrica future lies in predictable national energy supply industry. Alongside this, it intends to reduce costs by £750m annually between now and 2020, which in turn would improve margins as well as profitability.