Three to buy
Induction Healthcare Group
(The Mail on Sunday) The NHS loses about £1bn every year from missed outpatient appointments. This health technology firm aims to change that with its healthcare app, which helps patients to manage appointments and store medical records. Eighteen hospitals are already using the system and interest will only grow as the NHS looks for ways to manage the post-lockdown treatment backlog. This is not a business with a long history, but patient, risk-tolerant investors will find much to like. 99p
Standard Life Aberdeen
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(The Evening Standard) In a time of uncertainty people will be looking to save more, which should prove a tailwind for this global investment company. Management has been struggling to bring together the “creaking” pre-merger tech systems of Standard Life and Aberdeen. New CEO Stephen Bird could change that; he presided over “big digital changes” during his time at Citigroup and he has experience in the type of consumer business where SLA needs to grow. Now could be a decent moment to buy in. 272p
PayPal
(Shares) Covid-19 has accelerated the shift to digital payments, meaning more business for the dominant global provider of digital wallets. With more than 20 million merchants signed up to its service, PayPal enjoys a clear lead in the sector. For comparison, peers Square and Worldpay have just 2 million and 400,000 merchants respectively. This enables PayPal to enjoy the benefits of a “network effect”: its size makes it attractive to more customers, so more customers join, making its network even more dominant. In an industry where trust is paramount, PayPal’s well-known brand will make it difficult to displace. $171
Three to sell
Indivior
(Investors Chronicle) Shares in this pharmaceutical business rose after former boss Shaun Thaxter pleaded guilty to criminal charges in a US opioid case. The US Department of Justice is investigating the marketing of opioid addiction treatment Suboxone Film and demanding as much as $3bn in fines. Investors hope the plea deal could pave the way for a lighter penalty. The shares have crashed by more than 80% since June 2018 and trade on a price/earnings ratio excluding extra items of 6.4, but we think value hunters should “steer clear” until the legal issues are resolved. 84p
HP Inc.
(Forbes.com) Shares in this American maker of PCs and printers are up by 33% since March but remain below the $20 mark at which they started the year, says Trefis Team. Decent revenue and earnings growth over recent years has been overshadowed by a shrinking price/earnings ratio, partly thanks to the world’s ebbing enthusiasm for printing. The pandemic has brought markedly lower computer demand and the situation is unlikely to improve until the virus is fully contained. The share price could be on course to decline to around $14. $17
Premier Oil
(Motley Fool UK) The oil price may have recovered but it remains far off previous highs. Players across the industry are writing down the value of their assets, which bodes especially ill for Premier, which has “one of the weakest balance sheets in the sector”. Net debt has reached $2bn. The group will need to raise about £200m from shareholders to keep things ticking over. Premier’s market value is £460m so such a big dilution would be more bad news. Sell. 47p
...and the rest
The Daily Telegraph
It turns out that consumers still want to flock to beaches and pubs despite the ongoing pandemic. Hollywood Bowl was trading strongly before the virus and the shares are 50% off their peak, so they could be worth a punt (154p).
Investors Chronicle
Technology-focused defence contractor QinetiQ has long-term contracts with the Ministry of Defence and is drawing increasing revenue from overseas. It is also a favourite of fund managers. Buy (304p). Immuno-oncology specialist Merck is reasonably valued on a price/earnings ratio of 12 given its solid drugs portfolio and a promising pipeline of new treatments ($75.19). Pensions consultancy XPS Pensions will not “set pulses racing” but reliable revenue and a 6.2% forward dividend yield make it an appealing income play (115p).
The Times
Fund manager Liontrust brought in net assets of £901m between April and mid-June despite nervous markets and could do even better when things return to normal. Buy (1,430p). Medical equipment maker Smith & Nephew has a robust balance sheet and looks on course for a post-lockdown bounce back (1,581p).
Shares
Betfair and Paddy Power owner Flutter Entertainment is well-placed to profit from trends in online gambling and the opening of the US sports betting market – buy (10,875p). JPMorgan Japanese Investment Trust offers investors a way into high-quality businesses in a market where dividends remain stable (548p). At a time of painful dividend cuts, Supermarket Income Reit looks like a dependable income play – “keep buying” (112p).
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