Three to buy
J Sainsbury
A very strong trading update from the UK’s second-biggest grocer has made the City “sit up and take note”. Like-for-like sales jumped by 9.3% year-on-year over the Christmas period, while online sales vaulted by 128% in the three months to 2 January. Digital sales now account for 18% of the chain’s grocery revenue, up from just 7% a year before. The shares have a long record of disappointing but trading on a price-to-book value of just 0.75, value investors will spy an opportunity. 238p
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The PRS Reit
Investors Chronicle
There is huge demand for rented accommodation, but unfavourable tax changes have meant that many private landlords have decided to quit the market over the past few years. This Reit offers investors a headache-free way to cash in on this structural growth trend through an England-wide portfolio of more than 3,000 newbuild rental homes and apartments. Rent collection rates are high and on a forward discount to net asset value (NAV) of 23%, the shares offer value. A forecast 5.2% dividend yield is a final attraction. Buy. 77p
Treatt
The Mail on Sunday
There is growing awareness of the role played by sugary snacks and drinks in driving obesity. This natural-ingredients maker provides a solution, turning fruits and spices into healthy flavourings for iced teas and soft drinks. The dividend has risen for 31 years on the trot and last year’s lockdown only gave profits another boost. The shares have more than tripled since 2016 but there should be further upside to come for both the stock and the payout. 750p
Three to sell
CMC Markets
The Sunday Telegraph
Shares in this spread-betting business have more than tripled in less than 18 months, but now is the time to take profits. Regulators have already gone after the size of stakes on betting machines. Now spread-betting and “contracts for difference”, leveraged products that can lead to losses larger than the original stake, are surely “living on borrowed time”. A clampdown would hit CMC hard: leveraged products make up 97% of net trading revenue, of which roughly 30% comes from Britain. 428p
Foxtons
The Sunday Times
A flagging London market and fierce online competition mean that this estate agent has disappointed since listing in 2013. Yet London’s property market has perked up thanks to Chancellor Rishi Sunak’s stamp-duty holiday. Bulls hope for a longer-term rental boom as landlords shift away from Airbnb, which would bring in more business, but with the shares up by more than 80% since October, the stock should be avoided. 59p
Royal Dutch Shell
Motley Fool UK
This longtime income stalwart has failed to adapt to an era of lower oil prices. Revenues could be on track to fall by $160bn between 2014 and 2021. For all the talk of the energy transition, 90% of capital spending is still going on the moribund fossil fuels business, leaving Shell lagging fellow oil major BP, which has shown more urgency about breaking into the renewables game. True, the shares still yield 3.5%, but as last year’s dividend cut shows that can only last so long as underlying revenue and growth remain buoyant. Sell. 1,483p
...and the rest
The Daily Telegraph
Stronger than expected results from baker Greggs has left the shares “on a (sausage) roll”. The post-pandemic outlook is bright, but on more than 20 times earnings the valuation is a bit rich. Hold (1,856p). Singapore-listed NanoFilm Technologies makes world-leading coatings for electronics screens and has very strong growth prospects. Buy (S$4.93).
The Mail on Sunday
Online retailer N Brown makes clothes that are properly tailored for “more rounded” body shapes and stands to gain from greater interest in “size-inclusive” items (64p). At least 450 million people are thought to have diabetes worldwide and that figure is rising, so business at EKF Diagnostics, which makes sophisticated testing and monitoring kits, will enjoy a steady tailwind (74p).
Investors Chronicle
Aim “tech darling” dotdigital’s marketing software is well-placed to benefit from the rush of advertising cash online. Management is targeting international growth (160p).
Shares
BlackRock Latin American Investment Trust offers investors a way to bet on a recovery in unfashionable South American stocks in 2021 (415p). Alternative-asset manager Gresham House’s €10m purchase of Irish peer Appian is a “smart move” that gives it an EU base post-Brexit. Hold (810p).
The Times
Heating and plumbing specialist Ferguson is putting all its chips on North America after selling its UK Wolseley operation. The shares are reasonably priced given the group’s growth potential (9,328p).
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