Three to buy
Industrial-equipment rental company Ashtead has raised its full-year guidance following “an excellent start to the year”. In the six months to 31 October revenue was up by 18% year-on-year. Both its US and UK businesses are reporting strong growth. The company has trimmed operating costs and cut back on discretionary spending, which has strengthened its balance sheet and helped finance ten acquisitions to expand its footprint. 5,954p
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Coronavirus-related concerns in South Africa have weighed on platinum and chrome miner Tharisa’s share price, but it “should regain momentum as evidence piles up of its improved cash flow in 2022”. For the 12 months to 30 September the company reported record pre-tax profits of $185.3m, up by 145% year-on-year. Free cash flow grew to over $100m, and the dividend rose by 157%. Its balance sheet was strong at the end of the year, with net cash of $46.6m. Work in the group’s mines is “socially distanced by nature of the operations”, which means that potential virus-induced restrictions should have scant impact. 117p
Schroder European Real Estate Investment Trust
The Mail on Sunday
This trust offers investors exposure to “a wide range of commercial properties across Europe… targeting annual dividend yields of 5.5%”. Brexit and the pandemic have weighed heavily on the share price and the discount to net asset value (NAV) is 17.5%. Nevertheless, the company has continued to deliver income to shareholders.Both dividends and the stock should increase as the world recovers from Covid-19. 104p
Three to sell
The Daily Telegraph
Swiss biotech trust BB Biotech is trading at a “hefty premium” of 31% to its net asset value (NAV). “It’s hard to see why… when its two London-listed rivals trade in line with their NAV.” The company has benefited from the success of coronavirus vaccines; Moderna, in which it bought a stake in 2018, remains its largest asset. This has bolstered recent returns, but the longer-term performance of the fund lags behind London-listed rivals Biotech Growth and International Biotechnology, as well as the Nasdaq Biotechnology index. The firm looks overvalued, and there is no clear sign it will outperform its peers. Avoid. SFr78 (£64)
The Motley Fool
Sweetgreen is a US fast-casual restaurant chain that serves salads. The stock’s “initial pop” after it floated last month seemed “overdone”. It’s a strong brand “and folks aren’t flinching at paying an average of $15 for one of its fresh leafy creations”. But its valuation of $3.4bn looks lofty given that the chain has yet to turn a profit. Competition is intense. The stock “doesn’t deserve to be trading at a double-digit revenue multiple”. Avoid. $29.52
Babcock is an aerospace, defence and security company that struggled in the pandemic. It sold off three businesses worth £400m over the past few months, which will help reduce net debt. Operating profit for the six months to September 2021 was up by 36% and CEO David Lockwood plans to streamline the company’s structure. “But the task of fixing Babcock is far from over… until a clearer picture emerges, it’s one to avoid.” 306p
...and the rest
Impax Asset Management’s decision to concentrate on ethical investing has “paid off handsomely”. The fund manager’s “trophy funds” have enjoyed a record year; assets under management are up by 84% to £37.2bn. Hold (1,372p). Investment platform AJ Bell has launched two apps to attract more Millennials “to a simplified investment proposition”. These upgrades won’t be cheap, but show the company is ready to fight for its market share. Hold (387p).
The Mail on Sunday
Sirius Real Estate owns and runs business parks in Germany, and is now expanding into the UK. Further acquisitions are expected, which should translate into sustained income and dividend growth. Keep buying (140p).
Odyssean Investment Trust has a knack for selecting takeover targets, and the latest bid for pharmaceuticals group Clinigen, one of its holdings, has provided a boost for its share price. Results for the six months to September 2021 revealed an impressive 13.5% increase in net asset value (NAV) per share. Buy (157p).
The Daily Telegraph
Nvidia is a computer-chip designer. Its technology powers social-network features on TikTok and Facebook as well as Microsoft Word’s grammar checks. It looks poised to benefit from the “three major trends of the next decade”: artificial intelligence, augmented reality and 5G mobile networks. Buy ($282). Engineering firm Spirax-Sarco has raised its dividend for more than 20 consecutive years. It dominates the market for products regulating steam and electric-thermal energy, an area competitors will struggle to gain a foothold in. Buy (15,745p).
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