Three to buy
Hammerson
(Interactive Investor) Shares in this real-estate investment trust have slid sharply in recent years. Hammerson’s retail property portfolio has done it no favours in the pandemic, with 2020 rents set to fall by roughly 30%. Yet the vaccine means a brighter 2021, with analysts pencilling in £100m in net profit. Management is disposing of assets, enabling it to pay down debt. A “tentatively restored” scrip dividend is a bit of a “gimmick” but it does signal a commitment to future payouts. A speculative “buy”. 26p
Renewi
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(Shares) This waste-to-product business operates in a resilient niche, as shown by solid sales in the first half. Created from the 2017 merger of Britain’s Shanks Group and Dutch firm Van Gansewinkel, the recycling company has been dogged by elevated debt. A lengthy integration process has also proved more expensive than expected. Yet the latest first-half figures suggest that the group has turned a corner. Exceptional costs tumbled and free cash flow soared by 89%, helping it to cut net debt from €514m to €381m in a year. A “compelling recovery play”. 24p
Panoply Holdings
(The Mail on Sunday) Government projects are often bogged down by pricy and unwieldly IT systems. This “nimble” Aim-listed tech firm helps charities and the public sector to change that. When the NHS found itself desperately short of ventilators in the spring Panoply swiftly built a digital platform to coordinate the thousands of businesses offering help. It has “more than doubled in size” since it listed in 2018 and sales could hit £100m in three years. 118p
Three to sell
Cineworld
(The Sunday Times) It’s “been a dramatic few months” for Cineworld, which this week secured a £560m lifeline from creditors that will keep the lights turned on for now. The group was “on shaky financial ground” before Covid-19, with billions of dollars in debt accumulated during an aggressive acquisition drive. Shares have bounced on hopes of a vaccine-enabled reopening, but the group is fast running through cash reserves and remains acutely vulnerable to further disappointments. The risks are too high. Avoid. 46p
Aberforth Smaller Companies Trust
(The Times) Smaller companies tend to outperform their larger peers over the long term, and this fund’s portfolio looks “interesting”. But the current uncertainty surrounding our future relationship with the EU and the growth outlook is “extensive”, while the trust’s long-term performance is “offputting”. It has underperformed its benchmark over one, three and five years since its inception in 1990. The stock has recovered somewhat in the past three months but on balance this remains one to avoid. 1,100p
Dignity
(Investors Chronicle) Shares in the UK’s second-largest funerals provider have rallied since the Competition and Markets Authority delayed the introduction of price caps in August, but this may prove a brief reprieve. Dignity stands accused of “over-charging vulnerable customers” and the regulatory threat is likely to return once the pandemic is under control. Customers are also voting with their feet as the crisis drives a trend towards cheaper funerals. Sell. 637p
...and the rest
The Daily Telegraph
Motor credit and legal specialist Anexo is still reasonably priced and is attracting attention from private equity. Hold (146p). Better days could be ahead for value stocks, so consider the Temple Bar and Murray International investment trusts (912p; 1,036p).
Investors Chronicle
Greater restrictions on help-to-buy make for a shaky housing market outlook, but with a solid balance sheet and “a modest” valuation of 11 times earnings there is upside in prospect for Barratt Developments (619p).
The Mail on Sunday
Email marketing can be annoying, but evidence shows that it is an effective driver of sales. Dotdigital helps clients tailor those messages and manage customers’ requests. The shares have soared and some profit-taking may be in order, but with the e-commerce mega-trend still running investors should hold on (142p).
Shares
Shares in fashion brand Burberry have bounced on signs of an autumn sales recovery in China. On 20 times forward earnings the shares still trade at a large discount to luxury peers so this is a good time to buy (1,624p). Japan is back in favour, helping to drive a 25% rally for holders of JPMorgan Japanese Investment Trust since July. Management should continue to unearth hidden value so stay invested (688p).
The Times
Building tools rental business Speedy Hire has moved quickly to cut costs in the face of the virus; a hardy operator, it will also benefit from state infrastructure spending for “years to come”. Buy (69p).
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