Alliance & Leicester

The next FTSE 100 company I have taken a quick glance at is Alliance & Leicester (AL.)

AL is a small mortgage bank with a market cap. of only £4 Billion.

One of the first things I notice is that the brokers do not like this one with only one buy recommendation and eight negative ratings. A glance at the earnings forecasts shows why, with AL predicted to earn less in 2005 than 2004, and less in 2006 than 2005. Oh dear.

This is obviously not a growth stock but it does have a nice yield. The net yield is currently about 5.5% and the dividend is set to increase again next year.

With the forward PE at about 12 this bank is more expensive than RBS but without the growth.

I think a key to successful investing for those who do it as a hobby like me is to only spend time on the exciting companies, as analysis time is in such short supply. Therefore I will not be spending any more time on this one. I only have room for one bank in my mortgage portfolio and RBS is growing nicely and is much cheaper. I will leave this one for the yield chasers.