Three to buy
(The Mail on Sunday) The UK is a world leader in chilled food and Bakkavor is the top player. The group produces more than 12 million products every week for supermarkets, including “tons of garlic bread, hummus and every variety of pizza”. Consumer sentiment is improving and there are compelling overseas opportunities in markets such as the US, where the chilled food sector remains underdeveloped. On 4.4% the dividend yield provides a “tidy income”. 136p
(Shares) The government is poised to start spending more on the UK’s infrastructure, which badly needs an upgrade. That spells opportunity for this engineer. Renew works on the essential maintenance of rail, water, telecoms and nuclear decommissioning. Such work is often required by regulations, so business tends to be more predictable than for engineering peers (although Renew must still win the contracts in the first place). On 12.2 times forecast earnings the shares are a reasonably-priced way to play the UK infrastructure boom. 510p
(Barron’s) The third-biggest US mobile operator has spent the best part of “two years in Wall Street purgatory”. A proposed merger with rival Sprint has got stuck in the “regulatory maze”, with the resulting uncertainty weighing on the shares. However, a court judgement in the coming weeks is likely to draw a line under this episode, and whatever happens T-Mobile is “sitting pretty”. It is growing faster than its peers and the billions it would have spent on Sprint could be used to “resume share buybacks” if the merger falls through. It “doesn’t need Sprint to succeed”. $79.19
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Three to sell
(The Sunday Telegraph) What happens when a digital disrupter is so successful that there is little more growth to grab? Founded in 1993, this price-comparison website has shaken up everything – from insurance markets to credit cards, loans, energy and broadband. Yet this is now a mature market that will only grow if the wider economy does. Heavy reliance on Google also makes customer numbers volatile. On 18.1 times this year’s earnings the shares aren’t expensive, but “they don’t merit inclusion on a best-buy list” either. Sell. 326p
(The Sunday Times) Soaring global protein consumption means that farmers are looking for new ways to keep up with demand. That is good news for this livestock genetics firm, which helps farmers improve disease-resistance and yields. Chinese plans to rebuild pig herds after the decimation caused by African swine fever bode well. Yet the shares are up almost one-fifth over the past six months and on a price/earnings ratio of 267 there is scant further upside. Avoid. 3,080p
(The Times News) of its first consecutive quarterly profit has sent the market valuation of Elon Musk’s electric car company up to $115.5bn. Volkswagen is valued at $90bn even though it “sells more cars in a fortnight than Tesla sells in a year”. Yet with the incumbents muscling in with their own electric lines there is no guarantee that Tesla will maintain its lead. Even if it does, the shares, trading on “more than 200 times this year’s estimated profit”, look overvalued. Sell. $640.81
...and the rest
The Daily Telegraph
Nasdaq-listed CrowdStrike is pioneering a “revolutionary new defence” against computer viruses and its sales have been doubling annually. This may be a chance to invest in a “Silicon Valley star of the future” ($59.07).
Those wishing to make a contrarian bet on the slumping copper price should take a look at Central Asia Metals (210p). Shares in specialist industrial play RHI Magnesita have hit rock-bottom but the group has reduced costs and its markets could be about to turn up. A speculative buy (3,616p). Commercial property group LXI Reit boasts a diverse and defensive portfolio encompassing healthcare, hotels, supermarkets and leisure. Buy (135p).
Henderson EuroTrust offers exposure to some of the best quality businesses on the continent and trades on a discount to net asset value of 7.5% (1,208p). Good news on all fronts means that for FTSE-250 IT reseller Computacenter the prospects just “get better and better”. Earnings could surprise on the upside in 2020 so keep buying (1,798p). An expectation-beating 2019 and improving margins mean that electronics and LEDs specialist Luceco has had a great start to the year and the outlook remains auspicious – buy (148p). Investors should look past a “mixed” update by premium chocolatier Hotel Chocolat – the US and Japan remain compelling growth prospects (430p).
Buy-to-let and commercial lender Paragon Banking Group has a “solid strategy” and could be a takeover target (510p). Clinical trial specialist Clinigen is good value and growing fast (979p).
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