Six to buy
Morgan Stanley
(Investors Chronicle) There are plenty of reasons to dodge the banking sector: rock bottom interest rates and economic weakness will weigh on profitability over the coming years. An “ever-shifting” regulatory backdrop means investment banks are no haven, but Morgan Stanley is better placed than most. Its growing wealth-management and investment-management divisions provide valuable diversification, and the bank has little exposure to the rickety consumer credit and mortgage markets. On a price/earnings (p/e) ratio of 9.5 the shares have room to close a valuation gap with peers. $51.70
Saga
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(Interactive Investor) Shares in this over-50s insurer and cruise operator have jumped on hopes for the vaccines in development. The insurance side has broken even this year thanks to lower vehicle claims as lockdowns keep more people off the roads. The outlook now “hinges” on the cruising division. The industry has plenty of devoted fans and Saga’s premium cruise offering occupies an “attractive marketing” niche. If you think new vaccines will help release “pent-up demand” from prosperous pensioners next year, then buy. 183p
Schroders British Opportunities Trust
(The Mail on Sunday) The rout in the London market has left many of the best small and medium-sized British businesses strapped for investment cash, hampering their growth prospects. This soon-to-float trust aims to remedy that problem. The plan is to invest in about 30 to 50 companies split evenly between publicly listed and private businesses. Schroders has a good track record and the trust’s liquid structure will save investors from a Woodford-style meltdown if things go wrong. The deadline to apply for the share issue is November 26. “A patriotic buy.” 100p
Starbucks Corporation
(Shares) This “coffeehouse colossus” has 32,000 stores across 80 countries. American and Chinese sales have rebounded strongly since the first wave of lockdowns, with lower footfalls partially offset by higher-priced drinks and an “industry-leading” digital-ordering platform. The group is likely to emerge from the pandemic even more dominant as lockdowns decimate the competition. The shares are not cheap on 31.9 times 2021 earnings, but this is “a business full of beans”. $95
WHSmith
(The Sunday Telegraph) WHSmith’s shift from the floundering high street to outlets in transport hubs looked “inspired” until the pandemic struck. Its resilience in the face of the challenge has been “exemplary”: cost cutting means it needs only half of its normal footfall to break even. That is a testament to a strong corporate culture, helped by a succession of CEOs who have been recruited internally and know the business inside out. The firm is poised to profit from the rebound and the shares offer value. 1,353p
Wizz Air
(The Wall Street Journal) This London-listed Hungarian airline offers the best of both worlds: a pandemic recovery bet combined with a growth play. Around 65% of Wizz’s passengers are travelling to visit family and friends elsewhere in Europe, making the business “unusually resistant” to the frail tourism market. Indeed, Wizz briefly became the continent’s biggest airline during the spring lockdown. On a longer view, structural growth in its “core eastern European market” will provide a tailwind. The travails of Norwegian also create an opportunity to break into the long-haul market. 4,280p
...and the rest
The Daily Telegraph
Housebuilder Vistry trades on a 24% discount to net asset value (NAV) but the government will prop up the housing market “come what may”. Buy (711p). The Baillie Gifford China Growth Trust has an excellent track record but given an “eye-watering” 19% premium to NAV it is time to take profits. Sell (532p).
Investors Chronicle
“Digitally-focused” academic publisher-to-business analytics business Relx boasts a vast “archive of content and data” that helps fend off competition. A 2.6% dividend yield is also appealing. Buy (1,837p).
The Mail on Sunday
Post-pandemic construction and garden upgrades are auspicious for outdoor paving specialist Marshalls. A “robust, long-term investment” (795p).
Shares
The pandemic is accelerating the “mega-trend” towards online retailing. Leading digital payments service PayPal is ideally placed to profit – buy ($184.72). The Aberdeen Standard Asia Focus investment trust offers exposure to important Asian growth themes such as rising healthcare demand and e-commerce (1,031p). Shares in Mr Kipling cakes-owner Premier Foods have doubled since April but on a forward p/e of 9.4 they still look a tasty morsel. Hold (98p).
The Times
Shares in private-equity investor 3i Group have done well recently but on a forward p/e of just 6.3 this diverse portfolio still has room to deliver. Buy (1,111p). Building supplier Grafton Group is cashing in on the lockdown DIY boom but is still on a discount to historic levels. Buy (816p).
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Will Poland’s new president stifle its stock market’s winning streak?Poland’s stock market has outperformed many of its European peers, but with a newly-elected populist President at odds with a Liberal government, what lies ahead?
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Fund flows rose in April but did investors sell in May?ISA season prompted the highest level of inflows into investment funds during April but the mood may have changed in May
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Growth trends such as low-carbon grids and AI boost key infrastructure — how to investOpinion Richard Sem, partner, head of Europe, and portfolio manager at Pantheon Infrastructure, highlights three favourites as he shares where he'd put his money
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Investment opportunities in the world of Coca-ColaThere is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
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Streaming services are the new magic money tree for investors – but for how long?Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
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Trainline: a cheap cash machine for investorsOpinion Trainline’s shares have slumped owing to concerns about growth, but the sell-off seems overdone
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Look to British stocks to lead the charge as the Magnificent Seven falterOpinion Gervais Williams, fund manager, The Diverse Income Trust, picks three British stocks where he'd put his money
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'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
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Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
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Who will be the next Warren Buffett?Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
