Six to buy
(The Sunday Telegraph) A new wave of lockdowns once again puts the focus on shares offering a strong market position, famous brands and solid balance sheets. Britvic, the maker of J2O and Fruit Shoot, fits the bill. It is also Pepsi’s long-term UK bottling partner. Around 40% of sales come from pubs and restaurants, so revenue is down this year, but consumers have been buying more drinks in supermarkets, which has helped it dodge the worst. On 14 times forecast earnings there is scope for the shares to fizz higher in the long term. Buy. 746p
Cake Box Holdings
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(Interactive Investor) This franchiser of cream-cake shops is likely to see strong demand as a “Covid winter” drives us all towards comfort foods. Recent trading updates have been encouraging, with online sales up by 74% over the three months to the end of August. New franchises are continuing to open and disruption elsewhere in the hospitality industry will give new shops the “pick of talent… Cake may be naughty but [it] is irresistibly nice.” A “speculative” buy. 176p
De La Rue
(The Times) The turnaround at one of the London market’s oldest listed businesses is gathering pace under a new management team. The Serious Fraud Office ended a probe into South Sudan-linked corruption in June, removing one significant risk. A £100m issue of new shares over the summer helps shore up the balance sheet and will fund investment in polymer banknote production and the authentication operation. Growing demand for polymer notes and the World Health Organisation’s tobacco tax stamp scheme should ensure a steady pipeline of business. Buy. 144p
(Shares) This credit checker has a vast database of “163 million businesses and 1.3 billion consumer-credit history records”. The company ticks all the quality boxes, with high cash generation, market and sector-beating margins and resilient growth, including during the pandemic. There are only two other players in this sector – Equifax and TransUnion – and tight data regulation and the time it takes to build up a database keeps new competitors out. On a forward price/earnings ratio of 37.1 the shares are far from cheap, but it is worth paying up for one of the world’s “safest growth compounders”. 3,069p
(Investors Chronicle) This multinational supplier of generic medicines is well-placed to profit from an ageing population. Chronic conditions and associated drug shortages are on the rise across the developed world, boosting demand for alternatives to pricey brand-name treatments. That should see global generic sales top $100bn by the middle of the decade, up from $70bn last year. Operating across more than 50 countries, Hikma offers diversified revenue and invests continuously in its pipeline to offer more complex and profitable treatments. Buy. 2,685p
(The Mail on Sunday) This Aim-listed business supplies medical technology used in critical care to customers in 75 countries. It has a particular reputation for neonatal care and also stepped in earlier this year to help import ventilators during the first wave of the pandemic. In Britain, “virtually every hospital uses at least one of its products”. Revenues should double in the current year and management is hoping to triple sales to £100m over the next five to seven years. Inspiration Healthcare recently paid out its first dividend and there should be more to come. Buy. 66p
...and the rest
The Daily Telegraph
Ventilation specialist Volution Group has been on the acquisition trail in what remains a fragmented market. The pandemic has put renewed focus on the importance of good ventilation, so buy (197p).
Buoyant global markets in iron ore, copper and gold make engineer Weir Group’s decision to refocus on the mining industry look astute. There could be long-term upside for metals as emerging economies get going again, so keep buying the shares (1,629p).
The Mail on Sunday
Disease testing specialist EKF Diagnostics is likely to see profits more than double this year. A maiden dividend is due in December and the long-term outlook is equally auspicious, so keep buying (59p).
IP Group, which partners with British universities to bring new science businesses to life, recently sold out of an alternative-energy supplier for a tidy profit. The disposal could prove “the first of many”, so buy (83p). Shares in global- equity investor Mid Wynd have been trading near all-time highs thanks to the US tech rally, but the portfolio also offers exposure to less modish Asian growth stocks. “Keep buying” (679p).
Nike’s strong brand and online operation have helped it thrive through the crisis but on a price/earnings ratio of 76 the shares are even more expensive than those of big tech. Avoid ($129). Central European drinks seller Stock Spirits Group has seen sales continue to rise despite lockdown and the shares are on a big discount to the sector. Buy (237p).
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