Three to buy
Applegreen
(Shares) Drivers are back on the roads, meaning more business for this forecourt operator, which also owns Welcome Break. The group should profit from a “staycation boom” if overseas travel remains restricted through the summer. Net debt sits at over €500m, making this a high-risk investment, but management insists that it has enough cash to withstand even a prolonged period of weak trading. The shares are gathering momentum and there is scope for a 15% increase from here. 320p
VinaCapital Vietnam Opportunity Fund
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(The Mail on Sunday) Vietnam has delivered economic growth of around 6% a year over the past two decades and should get another boost as ever more firms look to move manufacturing supply chains out of China. This fund offers UK investors exposure to the growth story, with just over half the portfolio invested in quoted businesses and about 40% in private firms, which can deliver superior returns over the long run. Established in 2003 and today a member of the FTSE 250, the fund has a good record and also pays a dividend. 332p
Kerry Group
(Investors Chronicle) Once a small Irish dairy enterprise, Kerry Group has grown into a leading global food firm that makes flavourings, ingredients and emulsifiers. Its chilled foods brands include Richmond sausages. The business is focusing on natural, plant-based products and also sells reduced-sugar sweeteners. On 26 times earnings the shares aren’t cheap, but Kerry is exposed to long-term food trends. Buy. €109.90
Three to sell
C&C Group
(The Times) Many of us enjoy a drink in stressful times, but this manufacturer and distributor of alcoholic drinks has not been able to drown its sorrows. C&C supplies beers, ciders and spirits, with most sales in the UK and Ireland. It also owns a stake in pub business Admiral Taverns. An increase in drinking at home during lockdown failed to offset the effects of closed pubs and restaurants. Management has cancelled the dividend and cut salaries to preserve cash, but with so much uncertainty surrounding the next few months this is a sell. 207p
Rolls-Royce
(The Times) There is no hiding the seriousness of this aircraft engine maker’s financial crisis, which CEO Warren East recently described as its “darkest hour” since the 1970s. Half of the group’s income comes from civil aerospace – not ideal when most aeroplanes are sitting on the tarmac. Broker Jefferies thinks that in the first half Rolls-Royce will use up as much as £3.5bn in cash. That looks unsustainable given the likelihood of a protracted aviation slump. Short-sellers are targeting the shares. Sell. 301p
(The Daily Telegraph) It is time to “pocket our winnings”. In April we tipped Barclays’ bombed-out stock, citing its well-positioned investment banking operation as a key advantage over rivals. The turnaround has been quicker than we could have expected, with the shares surging 38% in just six weeks. With rising defaults and near-zero interest rates the longer-term outlook for UK banks is bumpy, so this is a good time to bank profits. 120p
...and the rest
The Daily Telegraph
Branded soft drinks business Coca-Cola Hellenic Bottling Company has defensive qualities and the shares should “fizz higher” as economies reopen and the tourist season begins. Buy (2,164p). There’s no cure for the “monetary incontinence” of central banks. Those looking for an inflation hedge should buy gold miner Centamin on weakness (168p). Talk that Microsoft’s market capitalisation could be poised to surpass that of the entire FTSE 100 is testament to the firm’s impregnable position. Hold ($185).
Investors Chronicle
Hedge yourself against the woes of UK plc. with corporate restructuring outfit FRP Advisory (120p). Africa-focused telecoms infrastructure play Helios Towers is locked into a structural growth story and should eventually morph from a growth into an income play (162p).
Shares
Greater interest in distance-working and long-term digitisation trends have helped shares in software business Kainos advance 18% this year and there should be more to come. Keep buying (850p). Investment trust Mid Wynd International finds high-quality businesses with solid long-term prospects in sectors such as healthcare and science equipment. The maintenance of its progressive dividend is a final plus point. Keep on buying (650p).
The Times
Hikma Pharmaceuticals sells the generic anaesthetics, sedatives and anti-infectives that hospitalised Covid-19 patients need and the growth outlook is auspicious beyond the pandemic. Buy (2,330p).
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