Three to buy
(Investors Chronicle) GSK’s multi-faceted fight against Covid-19 – developing a vaccine, repurposing existing medicines, and supporting the UK’s diagnostics infrastructure – has “underscored the breadth of its operations and its dominance in multiple arenas”. Its pipeline is strong too, with 37 medicines and 15 vaccines in development, which should drive future growth. A forward price/earnings ratio of 13 seems “undemanding” considering its diversified revenues, research and development focus and generous dividend. 1,771p
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(The Daily Telegraph) This Aim-listed company designs, makes and distributes eyewear frames for well-known opticians including Specsavers and Vision Express as well as other retailers such as Next and Walmart. Covid-19 has had some effect, but it “will not stop people needing to get their vision corrected” and the company’s vertically-integrated model will help margins recover quickly. Sales rose by 7% last year and underlying profits by 20%. It did not pay a dividend last year but there are hints of one in 2021. One for patient fans of smaller companies. 195p
(Shares) Despite the effects of coronavirus on the care home sector, the need for quality accommodation for older and more vulnerable people “has arguably never been greater”. This real-estate investment trust focuses on quality purpose-built care homes with single-occupancy rooms and ensuite facilities, and offers a yield of 6.2%. It is “particularly well-positioned” in a post-virus world where infection control is especially important. 107p
Three to sell
(The Mail on Sunday) Covid-19 has forced companies to do more online than they ever expected. That’s excellent news for software group Aveva. Around 40% of sales come from software facilitating website design while the rest relates to making machinery more efficient; monitoring systems will alert supervisors if a piece of equipment is malfunctioning, for instance. The group has over 16,000 customers worldwide and joined the FTSE 100 last year. However, the global slowdown may now hamper growth and the shares have had “a good run” in recent years. Take some profits. 4,081p
(Motley Fool UK) This has been “a nightmare year” for the pub group. The lockdown forced it to furlough 99% of its workforce. Customers are now returning but “the environment is likely to remain challenging”. Social-distancing measures mean it has to discourage large groups and it won’t be showing football in July. Most Britons also remain nervous about dining out. Net debt is almost three times equity and founder Tim Martin recently sold £5m of shares. Avoid. 901p
(Investors Chronicle) Aerospace technology and components specialist Senior was in trouble before the virus as Boeing stopped producing its 737 Max plane. All airlines have since cut their orders, while the downturn in the car and lorry sector has hit Senior too: the flexonics division, which deals with vehicle emissions, recorded a 27% drop in sales in the first half. The group is axing another 12% of its workforce and could struggle for years. 59p
...and the rest
More people working from home has boosted demand for software protection. Cybersecurity firm Avast is “good value for the market leader”. Buy (579p). Investors waiting to get into tabletop wargames-maker Games Workshop at a more reasonable price “might be disappointed”. Buy and hold for the long term (8,110p). The rising price of copper is good news for Atalaya Mining – buy (163p).
Defence specialist QinetiQ “continues to deliver on its growth strategy and remains a buy” (341p). Ocado has a “winning formula”, and as Britain’s first online supermarket, it enjoys first-mover advantage. “Keep buying” (1,187p). Second-hand car dealer Motorpoint suffered under lockdown, but business is picking up again. Buy (190p). The management behind Luceco, a maker of LED lighting and portable power products, “has done an exceptional job during the pandemic” and the future is bright. Buy (116p).
While Covid-19 and the West’s rift with China create medium-term risk, asset manager Ashmore should benefit from longer-term emerging-market growth. Hold (418p). “Resilient” credit checker Experian will profit from a move to a more digitised world. Buy (2,835p).
The Daily Telegraph
The Triple Point Social Housing Reit is an ethical play on property rents with the promise of a stable income. Hold (106p). Renewables fund Greencoat UK Wind has established a record of “attractive returns” and the shares are “worth tucking away” (144p).
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