Three to buy
Ocean Outdoor
(The Mail on Sunday) Outdoor advertising “had limited appeal” in 2020: turnover at ad agency Ocean Outdoor fell by 28% to £86m. But the firm “used the year wisely, bedding down 2019 acquisitions, renegotiating contracts with landlords and investing in the future”. Demand is recovering quickly and profits of £14.5m are expected next year, with “substantial gains” pencilled in for the years to come. The firm specialises in digital advertising, one of the fastest-growing subsectors $8.38
Serco
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(Investors’ Chronicle) The Covid-19 Test & Trace contract made up 17% of public-sector outsourcing group Serco’s revenues and led to a 31% increase in operating profit in the first half of 2021. Sales are expected to be lower in the second half of the year as Covid-19 “dissipates”, but the company believes “the goodwill it has built up will stand it in good stead”. The firm has a strong balance sheet, which offers protection. The company acquired US defence business Whitney, Bradley & Brown in February, which bodes well as the US defence budget is unlikely to be cut. 140p
London Stock Exchange Group
(Shares Magazine) The stock has swooned since March; investors are fretting over the cost of integrating data provider Refinitiv, acquired for $27bn. But interim results bode well. Pre-tax profits almost doubled to £510m. The deal with Refinitiv “enhances exposure” to subscription- based revenues and secures the firm’s position in Asia and America. The group boasts “unique... market infrastructure and data assets”. 7,812p
Three to sell
Palantir
(InvestorPlace) US software group Palantir “is a wonderful company”, but it is trading at an inflated price. The company does well when it comes to securing contracts with agencies of the US federal government, but growing its client base in the private sector “has been a work in progress”. The stock is on a forward price/earnings (p/e) ratio of 175. Even if it fell by 50%, its valuation would “more than [reflect] its growth prospects”. Avoid for now. $24.90
Capita
(Investors’ Chronicle) “Ever-shrinking outsourcer Capita enjoyed a reasonable half compare with its usual dreadful standards.” The company expects to “finally see sustainable free cash flow in 2022”. But for now, it is “bleeding cash” thanks partly to pension payments and restructuring costs. The firm disposed of £536m worth of assets in the first half, but the fire sale was due to the fast-approaching “wall of maturing short-term debt”. Like most other outsourcers, the firm’s assumptions on government spending “have been proved consistently wrong”, which has led to “troublesome and underperforming contracts”. Sell. 37p
Randall & Quilter
(The Daily Telegraph) It is not clear whether Aim-listed insurer Randall & Quilter qualifies for inheritance-tax (IHT) relief. The crux of the matter is the nature of the firm’s assets (“passively” held investments are not eligible for IHT relief, whereas “trading” assets needed to keep the company running are). R&Q insists its shares qualify, but HMRC may disagree. If you opted for R&Q for the IHT relief, sell and reinvest in another Aim stock. 170p
...and the rest
The Daily Telegraph
Shares in Fastned, the Dutch operator of fast-charging electric car stations, have fallen by 40% since February. That is probably due to the “unwinding” of some “speculative money” that went into renewables; there is no sign of trouble at the company. Hold (€60). MaxCyte, the “futuristic” gene-therapy company, has long-term potential. Last month’s listing on the Nasdaq raised $202m for research and development. Hold (1,105p).
Mail on Sunday
Flooring group James Halstead marked almost half a century of unbroken growth last year, which reflects the group’s culture of “financial conservatism and product innovation”. It boasts schools, stations, offices, shops, homes and hospitals as customers, and “virtually every NHS trust uses its flooring”. The stock should keep repaying shareholders “handsomely”. Hold (550p).
Investors’ Chronicle
Zetefoams is a specialist in cellular-materials technology, or foam. The company is struggling with “significant supply-chain inflationary pressures”. But they were either brought on by the pandemic or exacerbated by it, so they should eventually dissipate. Hold (449p).
Shares Magazine
Elective procedures are returning as Covid-19 ebbs. Demand for medical-equipment firm Boston Scientific’s products is picking up again. The group reported second-quarter profit and sales that surpassed expectations, and it has raised its full-year outlook. The stock has risen by 24% in 2021 and there should be further gains ahead. Buy ($43.81).
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Gold’s allure and why you should never 'pay a premium for graded coins'It is easy to become distracted by the beauty of gold, but remember why you buy it, says Dominic Frisby
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A rebound in UK's commercial property – should you invest?UK commercial property's three-year bear market finally appears to be over, says Max King
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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.
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Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
