Three to buy
Aviva
(Shares) Aviva has reported “robust” half-year results and reinstated its dividend. Yet shares in the insurer trade on just 6.5 times forward earnings, one of the lowest ratings in the FTSE 100. That looks unjustified. New boss Amanda Blanc is refocusing the business on core markets in the UK, Ireland and Canada and has already sold the “prized” Singapore operation for £1.6bn. The cash will help Aviva to reduce leverage and the strategy should ultimately pave the way for higher investor returns. 301p
Domino’s Pizza
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(The Sunday Telegraph) Recent coverage of this pizza chain has been dominated by spats between management and franchisees about the pace of new store openings. However, lockdown gave both sides a slice of the action as housebound consumers turned to food delivery. That generated a 3.7% jump in first-half underlying sales and could help ease the way to better relations in the future. The shares are worth a bite. 341.75p
Ocado
(The Mail on Sunday) Ocado’s shares are expensive and the company is loss-making. But lockdown seems to have shifted shopping habits, with consumers still ordering online at an “unprecedented rate”. A new partnership with Marks & Spencer is going well, coinciding with a 52% leap in third quarter revenue. It is also partnering with big supermarkets in the US and France for their online operations. With a grim “stay-at-home winter” looming, the attractions of the virtual checkout will grow. 2,817p
Three to sell
Premier Oil & Tullow Oil
(Interactive Investor) Weak oil prices have turned these two independent oil producers into “proverbial ‘zombies’” – companies that are using debt to stay afloat while praying that oil prices improve. That hasn’t stopped speculative fever – both saw their share prices more than triple between March and mid-June. Yet renewed doubts about global demand for “black gold” this autumn have seen those gains unwind while interim results have been little short of “carnage”. Such volatile, “snakes and ladders” shares are not for long-term investors, so steer clear. 17.5p and 15p
The Hut Group
(The Evening Standard) Investors have piled into this newly floated e-commerce specialist, which sells everything from mascara to sports nutrition products. The e-commerce outsourcing arm Ingenuity is an especially compelling growth play. Yet this float has “got more red flags than Tiananmen Square”. All the big banks are involved in the IPO so there are few sceptics to be found, while early backer KKR is selling all of its stake, which is hardly a ringing endorsement. The post-float corporate governance arrangements are also “all over the place”. Wait six months to see how things “settle” before putting any of your own money on the line. 610p
Greencore
(The Times) This Irish convenience-food group was in a sweet spot. Then the pandemic struck, keeping people stuck at home and making their own sandwiches. The group’s food-to-go revenue halved between late March and June and its “convalescence” is proving slow going. Food-processing plants are also vulnerable to virus outbreaks. Avoid. 111.25p
...and the rest
The Daily Telegraph
Wind power requires big, complex machinery, which keeps new entrants out of the market. That has ensured fast-rising profits for Danish renewables pioneer Vestas (DKr948.8). Motoring accident credit and legal specialist Anexo could prove a bargain at the current valuation (127.5p).
Investors Chronicle
Shares in Adobe have been swept up by this year’s US tech surge but even on 48 times forecast earnings they are still a buy: this business combines the reliable cash-generation of an established name with the growth prospects of a digital play ($471). Hurricanes and wildfires have left many Americans in the dark this year. That should bring rising demand for back-up power specialist Generac ($184).
The Mail on Sunday
Aim-listed online mattress seller Eve Sleep has been a “nightmare” investment in recent years but a 25% sales jump in the second quarter suggests that it is well-placed to capitalise if a “miserable winter” keeps families out of physical stores (4.85p).
Shares
Shares in audio technology play Focusrite are up by almost one-fifth since July and should continue to rise on the back of structural tailwinds (819p). Smart Metering Systems has been resilient this year. Hold for the generous dividend policy (660p).
The Times
Premium drinks maker Fever-Tree is going from strength to strength and has room to expand in the United States (2,183p). Loungers, which operates café bar chains, is well-placed to flourish when life returns to normal (170p).
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