Three to buy
CMC Markets
(The Sunday Telegraph) When stocks slump one beneficiary is the spread-betting industry. CMC Markets came into the crisis “in good shape”, with profits up more than fourfold at the last half-year report in September. Recent market swings have seen clients’ trading activity running at twice the normal volume, which should bring a £10m-£15m revenue boost in March alone. On 11 times next year’s earnings the rating is undemanding and cash on the balance sheet accounts for almost a fifth of the firm’s market value, which is a comfort. Keep buying. 166p
Hilton Food
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(Shares) This global food group’s services are in high demand as supermarkets rush to keep their shelves stocked. Big operators like Hilton have an advantage in the meat-packing business, a consolidating sector that demands high traceability standards and reasonable costs. The group has also moved into fish, while investment in vegetarian specialist Dalco provides some protection against the decline in meat sales. A robust balance sheet should see Hilton through the difficult months ahead. This is “a company to own for the long-term”. 945p
Synairgen
(The Sunday Times) The race is on to find treatments for Covid-19. This little-known British biotech is starting clinical trials of interferon beta, a protein that boosts the lung’s defences. A successful trial would mark a turnaround for a stock caught up in the Neil Woodford fiasco last year. Clinical trials are “notoriously high risk”, but previous tests on patients with multiple sclerosis have already laid some of the groundwork. Buy. 46p
Three to sell
Genel Energy
(Investors Chronicle) This Kurdistan-focused oil producer says that it can still generate cash when oil prices are low, but the price slump is testing even the fittest producers. Last year was a banner year for Genel, as previous losses turned into a $132m profit and it launched a generous dividend. The firm says that its strong cash position will keep it resilient at prices as low as $30/barrel, but given an unprecedented demand shock coupled with the Saudi-Russian supply war even that price level could prove optimistic. Exit before things get worse. 82p
Costain
(Investors Chronicle) A “smart” infrastructure and technology construction business such as Costain should have been a sure bet given the government’s decision to greenlight HS2 and a £640bn infrastructure plan. Yet contract delays and profit warnings have seen the share price plunge by 88% over the past year. The shares are close to all-time lows, but “spiralling costs” on a National Grid contract and uncertainty over future road investment make them a “value trap”, not a “value play”. Sell. 38p
NMC Health
(The Times) The Gulf-based hospital provider offers exposure to the structural growth of private healthcare in a wealthy part of the world. Yet disquieting recent news ranges from “suspicions of fraud” to an extraordinary $4.3bn revaluation of its stated debts. Trading in the shares was suspended in London at the end of February. Investors now have little choice but to cut their losses “when they can”. 939p
...and the rest
The Daily Telegraph
Fans of drinks makers Diageo and Rémy Cointreau will stick around whether locked down or not, so buy now (2,381p; $15). France’s Dassault Systèmes makes cutting-edge design software, has a long-term culture and customer retention is high. Buy (€131). People still need to buy clothes and Next has a well thought-out strategy for moving online – buy (3,965p). There is evidence that pet owners would rather go without in hard times than cut spending on their furry friends, so buy Pets at Home (243p). Craneware, a maker of software that helps hospitals to run more efficiently, should see rising demand. Buy (1,310p).
Investors Chronicle
Near-zero interest rates are bad news for Britain’s banks, but a share-price pullback at OneSavings Bank represents an opportunity to buy into a well-run and resilient business that will weather the crisis (210p). Social distancing is generating a boom in video gaming, so buy developer Codemasters while the stock is cheap (215p).
Shares
A prolonged lockdown will only accelerate the trend towards online grocery shopping, so keep buying Ocado (1,343p). Document management business Restore was “firing on all cylinders” at the end of last year and a strong financial base ensures that it should be “first out of the blocks” once the economy returns to normal (360p). “Boring” and “stable” utility companies are always appealing in times of stress. SSE is the pick of the bunch; it has an edge over peers in green technology (1,134p).
The Times
Business was booming at travel food and drink outlet specialist SSP before the shutdown, but the dividend has now been suspended. Hold (290p).
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