Six to buy
Byotrol
(The Mail on Sunday) Hand sanitiser is “flying off the shelves”, but regulation about what is in the products remains surprisingly lax: many are only effective for a short time and often use alcohol, which can irritate sensitive skin. This “fast-growing” Aim business offers antimicrobial products “backed by rigorous scientific research” and boasts strong commercial links with the likes of Boots and the NHS. Three positive trading updates in recent months suggest the “best is yet to come”. 6p
B&M European Value Retail
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(Investors Chronicle) This discount retailer sells groceries, kitchenware and furniture through its 656 UK stores. More consumers than ever are shopping at discounters and lockdown has brought new shoppers through the doors. Once they start using B&M, customers tend to remain loyal, with 82% reporting that they shop there “regularly or occasionally”. The group’s shares are popular with money managers and, trading on 16 times forecast earnings, the valuation is reasonable. 486p
Clinigen
(The Sunday Telegraph) Big pharmaceutical firms are in fashion. This stock offers a way to “co-operate” rather than “compete” with the industry giants. Clinigen supplies the drugs used for clinical trials, a highly regulated area that requires careful compliance. The group also makes money sourcing as yet unlicensed medicines and also invests in drug licences when it spots an opportunity others have missed. Clinigen is not big pharma, but “it is big enough to prosper”. On 11.3 times forecast earnings the shares are a buy. 694p
Spirent
(Shares) This multinational telecommunications testing business is at the forefront of the rollout of 5G mobile networks. 5G should deliver much faster mobile download speeds and bigger bandwidth, satisfying the economy’s insatiable appetite for data. Investment in the technology continued through the Covid-19 crisis, a testament to the “mission-critical” nature of Spirent’s work for military and scientific organisations. The firm has been on a “hiring binge” to keep up with customer demand. On a forward price/earnings ratio of 25, the stock should be tucked away for the medium to long term. 301p
Merck
(Barron’s) The healthcare rally has passed this American pharma business by, with the shares down by 8% for the year to date. The market is concerned about Merck’s dependence on Keytruda, a blockbuster cancer drug that accounts for about 30% of revenue, but whose patent expires in 2028. Nevertheless, Merck has time to launch new treatments before then and its vaccine division is working on two potential Covid-19 vaccines. With a secure 3% dividend yield and trading on an undemanding 15 times this year’s earnings, the shares offer exposure to a top-class pharmaceutical player “at a reasonable price”. $83
Topps Tiles
(The Times) Housebound DIY enthusiasts appear to be driving a revenue rebound at this tiling retailer, which is considered something of a “barometer of consumer confidence”. Sales remain down compared with this time last year, but a recovery is under way, leading to hopes that Topps will manage to turn a profit this year after all. CEO Rob Parker notes that customers are using YouTube videos to prepare themselves for more ambitious home-improvement projects than in the past. The group will not pay a dividend this year as it used government help during the lockdown, but payouts should resume in 2021. Buy. 49p
... and the rest
The Daily Telegraph
Uranium oxide supplier Yellow Cake stands to gain from a shortage of the nuclear fuel. A buy for the risk-tolerant “contrarian” (213p).
Investors Chronicle
Mature natural gas-field investor Diversified Gas & Oil proved its resilience in the first half and pays a 10%+ dividend (100p). These are grim times for commercial landlords, but Helical’s prime London and Manchester portfolio and robust balance sheet bode well. Buy (310p). Gym closures have driven new interest in solo exercise. That promises new business for US tech firm Garmin, which specialises in exercise tracking gadgets. Buy ($102).
The Mail on Sunday
Shares in video-games developer Codemasters, best known for its racing games, are up by 40% since January thanks to a surge in demand during lockdown. Take some profits (395p).
Shares
Higher audience figures during lockdown have not delivered an advertising-income jump for ITV, but “we are keeping the faith” (64p). Shares in Trinidad oil play Touchstone Exploration are up by 40% since June and rising production could keep the positive momentum going (73p).
The Times
Balfour Beatty should be one of the big winners from Boris Johnson’s Keynesian “infrastructure splurge”. On about 11 times forward earnings the shares are reasonably priced (258p). BP’s new green strategy is a good start, but it remains to be seen whether it succeeds in new renewables markets, such as offshore wind, where competition is already intense. Hold (299p).
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