Three to buy
Goldman Sachs Group
(Barron’s) While “Main Street” retail banks contend with shaky consumer confidence and ultra-low interest rates, the trading arms of investment banks help them to profit from loose monetary policy. Surging corporate debt issuance is good for the underwriting operation and merger activity may pick up later this year. Unpredictable earnings and the Malaysian 1MDB scandal remain problems, but the business appears well-placed to profit from the current market environment. $200
Harworth Group
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(The Daily Telegraph) Struggling high streets and empty offices mean that real-estate companies are firmly out of fashion, but that has created some bargains. This land and property regeneration group trades on a reasonable 35% discount to net asset value. Harworth invests in about 100 residential, industrial and logistics sites across the north of England and the Midlands. That diversification should leave it well-placed however the post-pandemic future of work and e-commerce ultimately develops. 102p
Ultra Electronics
(The Sunday Telegraph) This military equipment maker is less well-known than some of its peers, but could be one to watch. Ultra Electronics makes equipment used in submarine detection, torpedoes and communications, hi-tech niches that are attracting strong US defence interest; America accounts for half of Ultra’s revenue. Rising geopolitical tensions are likely to keep global defence budgets robust. In uncertain times, defence is a reassuringly “defensive” play. Buy. 1,994p
Three to sell
Applegreen
(Shares) Shares magazine only tipped this forecourt operator at the start of the month, but reckons that it is already time to take profits. Shares in the Welcome Break-owner have gained more than 10%. While the group should benefit from more people coming back onto the roads and a “staycation boom” this summer, that has to be set against a €545m net debt position and the risk of a more prolonged pandemic slump. The recent gains may lead the risk-averse to conclude that balance between risk and reward is now less favourable. 340p
Cineworld
(Investors Chronicle) This cinema chain’s venues have been closed because of the pandemic, but that has not stopped it from serving up its own share of “drama”. Management agreed to buy Canadian peer Cineplex in a £1.8bn deal in late 2019, but is now backing out, citing “breaches” of the acquisition agreement. Cineplex plans to sue. The scrapping of the deal should free up much-needed cash, but with the outlook for the sector uncertain and a legal battle to add to the in-tray, investors should sell. 75p
Moneysupermarket.com
(The Times) With fewer people driving and home transactions stalled during lockdowns, fewer people are shopping around for a better insurance deal. A cooling of competition between banks in the loans and savings market has also hit the money side of the business. One bright spot is an increase in utility switching as people spend more time at home. This is one of the best price-comparison sites, but the climb back from the crisis could be a long one. Avoid. 325p
...and the rest
Investors Chronicle
Insurance-led fund manager M&G has struggled to shake off the impression that it is an unwanted cast-off from last year’s demerger from Prudential. Yet a generous dividend policy and big discount to sector peers more than make up for the underwhelming growth prospects. Buy (151p). The era of working from home is driving more spending on home improvements and boosting online business at DFS Furniture. Buy (177p). Record levels of Chinese steel consumption and falling global copper stockpiles are a tailwind for mining giant BHP Group. On a dividend yield of just over 3% it also pays an attractive income. Buy (3,633p).
The Daily Telegraph
A focus on tech businesses has helped Monks Investment Trust consistently beat the FTSE 100. We think that the trust will keep up the good work despite a forthcoming change of management. Hold (1,010p).
Shares
Leading UK pawnbroker H&T Group is one business that should thrive if the downturn proves prolonged. What’s more, the shares trade on a “miserly” 6.5 times this year’s net profit. Buy (317p). US hospitals have never been under more pressure to run efficiently. That’s good news for Scottish hospital software group Craneware, which dominates this “exciting niche” (1,830p).
The Times
A recent share-price retreat is a buying opportunity at intellectual property and translation specialist RWS Holdings. The group should prosper thanks to its clients in the buoyant science and technology sectors (593p).
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