Three to buy
Tristel
(Shares) This disinfection and cleaning products specialist will have a role to play in fighting the coronavirus. Business was booming even before the Covid-19 epidemic, with revenue advancing 22% in the second half of 2019 and pre-tax profit up 25%. A 60% rally over the past year has taken the shares up to 31.6 times forecast earnings, leaving “limited margin for error”. Yet we remain confident about a business with a “consistent record of revenue, profit and dividend growth”. Buy. 490p
Frontier Developments
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(The Sunday Telegraph) This video-games developer has remained at the top of its game for more than three decades. The recent success of zoo simulator Planet Zoo shows that it still knows how to make a hit. The rise of game downloads has liberated the sector from the old “console cycle” and reduced costs as they no longer need as much physical stock. A plan to launch more games annually should see revenue rise further after 2022. “If the global economy grinds to a halt because of [the]coronavirus, we might as well sit at home in self-isolation playing video games.” 1,150p
Golden Prospect Precious Metals
(The Mail on Sunday) With markets plunging and sovereign bond yields negative it is little surprise that gold is on the up. Betting on junior miners, however, is “fraught with danger”. Investment trusts offer a way to spread the risk. Golden Prospect, which invests in small and mid-sized operators, has a “record of success” in a sector where picking winners can be tricky. The current 29% discount to net asset value is excessive. 29p
Three to sell
Epwin
(Investors Chronicle) Epwin makes and distributes building products such as PVC windows, doors and cladding. Conditions have been tough in its core repair, maintenance and improvement (RMI) market in recent years, with weak sterling inflating costs and weighing on margins. This is a cyclical business and hopes of a post-election spending boost had seen the shares rally prior to the recent market correction. Yet Epwin is a lower-quality and lower-growth outfit than peers such as Eurocell. “There could be an uphill struggle ahead.” Sell. 110p
De La Rue
(The Times) Banknote printer-to-product authentication specialist De La Rue has another turnaround plan; this one involves “accelerated cost-cutting”. A global shift towards electronic payments is a challenge for a firm that generates two-thirds of revenue from banknotes. De La Rue is pinning its hopes on wider adoption of polymer notes to generate growth. Yet previous turnaround efforts have led to “boardroom turmoil” and profit warnings. Given all this uncertainty, investors should steer clear of the shares. 143p
(The Times) Bullish hopes for sales of the iPhone 11 were dealt a blow last month when Apple warned that Covid-19 would hit revenue this quarter. Disruption at Chinese factories has constrained supply and the temporary closure of all of its 42 stores in the country was bad news for sales in a region that accounts for 15% of overall revenue. Management has not yet provided revised sales estimates. “Wait until the coronavirus fog clears.” $288
...and the rest
The Mail on Sunday
Construction group Morgan Sindall has eschewed big-ticket contracts to focus on smaller and more profitable projects. A recent Covid-19 induced sell-off is undeserved. Existing shareholders should hold and “new investors could also take a closer look”. 1,754p
Investors Chronicle
A coronavirus-related share-price pullback represents a buying opportunity at electronics group Luceco:a stronger balance sheet and an upcoming UK infrastructure spending boost mean there is upside potential (125p). Walt Disney is still generating “big bucks” at the box office and its new streaming service shows it can adapt to changing consumer preferences. Buy ($141). Civitas Social Housing Reit offers inflation-linked income in environmental, social and governance packaging (101p).
Shares
Buy into brownfield regeneration specialist St. Modwen Properties as it shifts away from struggling retail and towards the growing industrial and logistics sectors (493p). PPI claims weighed on full-year performance at Lloyds Banking Group, but a stronger balance sheet and brighter economic outlook in the UK mean that we remain bullish (53p). Jet2 owner Dart Group has been a big winner from the demise of Thomas Cook, but risk from the coronavirus means investors should steer clear of travel stocks for now (1,320p).
The Times
Funds site IntegraFin, which helps financial advisers buy on behalf of clients, will benefit as an ageing population needs to save more for retirement – buy (479p).
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