Three to buy
Sirius Real Estate
(Shares) This commercial-property investor owns more than €1bn-worth of sites across major German cities with more than 5,000 individual tenants. Sensible acquisitions and active management boost returns. The focus on the stable German market bolsters resilience: rent collection rates have remained close to normal despite the pandemic. The shares yield 4% and the business has room to extend its record of excellent returns. “Who knew German business parks could be so exciting?” Buy. 77p
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(The Mail on Sunday) Gold miners offer outsized exposure to the yellow metal rally, but many also bring an unpleasant cocktail of operational and political risks. Canadian firm Yamana minimises these issues. Its five operational mines are in mining-friendly parts of the Americas and management remains cost-focused even in the good times. The firm offers a consistent dividend and has scope to boost output. 450p
(The Times) Cancelled trade shows are weighing on sentiment towards this publishing and business-information conglomerate, but the gloom is overdone. Trade shows made up only about 16% of turnover last year, with the group’s digital publishing and data-analytics businesses much better positioned for an era of social distancing. The academic journal publishing wing has successfully transitioned to the digital age and delivers very impressive profit margins. On a price/earnings ratio of about 24 the shares are reasonably priced for a “well-managed, diverse company”. 1,637p
Three to sell
(Investors Chronicle) This Lancashire business works in robotics-process automation, which sees software take care of “mind-numbing back-office jobs”. Like so many tech businesses it is fast-growing but yet to make a profit. Investors are understandably enthusiastic about the opportunity to buy into a rare British tech play. Yet the group’s spending on sales and marketing has come at the expense of research and development, leaving the firm vulnerable to well-funded competitors. “Persistent short interest” suggests we are not the only sceptics. Sell. 1,385p
(The Daily Telegraph) This energy, healthcare and technology distribution specialist boasts a strong record and the latest trading statement reported nothing “particularly untoward”. Yet the shares have continued to grind lower of late, confirming our suspicion that the valuation is too rich and that growth has been disproportionately driven by acquisitions. Despite the recent falls a price/earnings ratio of 16 looks unjustified for a business whose underlying organic growth rates are “probably in the mid-single digits at best”. Avoid. 5,230p
(The Motley Fool UK) Shares in this online supermarket have slipped by 20% in two months. The market value of £16.85bn is still comparable to that of major supermarkets despite its mere 1.8% grocery share. Bulls say this is really a software business, but bears note that building supermarket supply chains is much more capital-intensive than writing code. What is certain is that “Ocado will have to deliver heroically” to justify this rating, so avoid. 2,312p
...and the rest
The Daily Telegraph
Germany-based food app business Delivery Hero offers exposure to the thriving Asian and Latin American markets and doesn’t look unduly expensive given the global growth opportunity. Buy (€91.34). Shares in Greggs are back to 2015 levels, but it is well-placed to return to its winning ways once the pandemic is over. It’s a buy for the patient investor (1,318p).
The Mail on Sunday
Highland gold operator Scotgold will start production soon at its Cononish mine. The shares have more than doubled in a year, so some profit-taking could be in order, but patriotic investors will want to hold onto a stake in this “rare British mining success story” (119p).
Investors wishing to bet on better days ahead for UK value shares should consider Aurora Investment Trust (169p). Shares in small-cap energy explorer Touchstone Exploration have nearly doubled in a matter of months on new gas discoveries. A virtuous cycle of more production financing new finds could keep the rally running. Keep buying (169p). Shares in Ford Motor Co. have made up much of the ground lost by the March sell off amid strong global demand for SUVs and pickup trucks so keep buying into this recovery play ($7.60).
Strong output at Russian precious-metals miner Polymetal will fund generous dividends that could yield 5.9% this year. Buy (1,781p). Never mind slower subscriber growth, Netflix’s latest results suggest that it is growing ever more profitable. Buy ($36.37). Social-care specialist CareTech is beating expectations and could grow further through acquisitions. Buy (470p).
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