Three to buy
tinyBuild
(The Daily Telegraph) Instead of developing its own games, tinyBuild takes on “promising titles from independent developers” and helps with funding, marketing and technical expertise. It is “becoming extremely profitable and cash generative” and “little need to invest in fixed assets” has translated into very high returns on capital. The computer-games sector is “bigger than film and music combined”, and tinyBuild will keep growing with it. 265p
Crossword Cybersecurity
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(The Mail on Sunday) Covid-19 passports are being “actively explored” by governments and firms worldwide. With fraudsters “already at work” offering fake certificates, the documentation “needs to be secure”. Crossword Cybersecurity is working to ensure that Covid-19 certificates are “authentic and safe”. It has trials under way with the East Kent Hospitals University NHS Foundation Trust and some entertainment venues. It also “has several other strings to its bow”, including cybersecurity firm Rizikon, and already has food manufacturers, financial services providers, schools and local authorities as clients. 342p
Equals
(Shares) Electronic banking and international-payments firm Equals had a “tumultuous 2020”. On top of Covid-19, it was hit by the “implosion” of “now-defunct German firm Wirecard” as one of its services was backed by it. But its partnership agreements with firms such as Citi and Mastercard, top customer service and new products enabled it to keep growing. The UK payments sector is competitive, but it “stands out for the breadth of its proposition for both businesses and consumers”. It has £9m of cash and should also benefit once travel restrictions are lifted. 43p
Three to sell
Greggs
(The Daily Telegraph) “Greggs’ only liabilities are the leases on its 2,000-plus shops,” so it might seem “perverse” to suggest selling. But profits peaked before the pandemic at £92m, and its current market value of £2.4bn “equates to 26 times that sum”. Although valuation alone is never the “catalyst for a share price to falter… any hint of disappointment, any stumbles in the road out of lockdown, or even any doubts” could leave that valuation looking “a little exposed”. It’s time to “tuck away our profits” and sell. 2,349p
Sainsbury’s
(Investors’ Chronicle) The bid rumours that had surrounded Sainsbury’s prior to its latest results “were considerably more interesting than the supermarket’s largely flat operational performance”. It hit its guidance for underlying profits at £365m, but will “chronic underperformance” keep dogging it once Covid-19 departs? The trading advantages brought on by the pandemic “were more than offset by the costs those restrictions imposed”: £485m in Sainsbury’s case. Its online operations grew, but the bank lost money. The “record of underachievement that goes back many years” makes the stock a sell. 239p
Ocugen
(The Motley Fool) Ocugen’s partnership with India’s Bharat Biotech has generated excitement since it was revealed that their jointly developed vaccine was 100% effective against severe Covid-19 cases. But the US “may already have all the vaccines it needs”. The firm will get 45% of the profits the vaccine generates in the US, but 30% of people in the US have been fully vaccinated and 43% have had at least one dose. There is nothing else in the pipeline. Avoid. $15.68
...and the rest
Shares
Music and audio products company Focusrite continues to post impressive growth. It revealed a 91% year-on-year increase in sales to £95.3m for the six months to February 2021. Successful acquisitions continue to expand the firm’s footprint. Buy (1,209p). Credit hire and legal services firm Anexo was an “Aim star” in 2019. But the pandemic “caused a drop in traffic” in the first half of 2020 and its shares have continued to languish. Sell (133p).
The Mail on Sunday
Speedy Hire rents out “hundreds of thousands” of building products ,“from traffic cones to massive machines”. It works with 87 of the top 100 construction firms and “thousands of one-man firms”. The shares have bounced strongly despite Covid-19. If you own the shares, hold; new investors can buy (76p).
The Times
InterContinental Hotels Group’s 2020 sales were 52% below 2019 levels at $992m. But “despite the battering, IHG… is in pretty good shape” and looks well placed to benefit from the travel rebound. It also has 1,815 new hotels in the pipeline, while $75m of cost cuts will bolster margins. Hold (5,151p).
The Daily Telegraph
Residential Secure Income has seen the value of its portfolio rise to £345m after a successful acquisition. The trust said its “improved earnings position” meant it expects to resume full dividend coverage in July. It remains a “stable source of inflation-linked income”. Hold (98p). Shares in figurines retailer Games Workshop have gained 81% in a year. The company has done “fantastically well selling its products online” and it looks set to keep growing. Hold for now (10,900p).
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