Three to buy
National Grid
The Daily Telegraph
National Grid (NG) is an “oft-overlooked opportunity to benefit from the energy transition” and it is now “pivoting to electricity assets”. It recently acquired Western Power Distribution, the UK’s largest electricity distribution network operator, and plans to sell a majority stake in its gas grid. Electricity usage is predicted to rise significantly and NG’s “monopoly position” means it could be a simple, low-risk way of capitalising on that growth. The company expects underlying earnings per share to grow 5%-7% between 2021 and 2026. It aims for its dividend at least to keep pace with inflation. 1,077p
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Porvair
Investors’ Chronicle
Shares of filtration and environmental technology specialist Porvair “reversed their downward trajectory” after it reported a return to pre-pandemic profitability. Growth in its laboratory segment, which makes equipment for coronavirus testing, helped increase its revenues by 8% year on year. Sales of coolant and fuel filters for commercial aircraft fell by 10% as travel remained slow, but should
pick up in 2022. The company has an “excellent... record of growth” and tends to give “conservative financial guidelines”, so could perform better than expected. 680p
ProCook
The Sunday Times
Cookware retailer ProCook removed its goods from Amazon last year as it “reckoned shoppers could be tempted onto its website” and into its shops. It benefited from an increase in home cooking during the pandemic – sales went up 37% in the year to April 2021. The return to offices and restaurants, rising energy bills and an increase in food prices will now be a key test. However, revenues for the three months to 9 January were up 34.6% from the same period the year before. 159p
Three to sell
Carnival
The Daily Telegraph
Cruise-ship operator Carnival’s “second consecutive plunge in revenues and a multibillion-dollar loss are hardly a surprise”. It “may seem perverse” to suggest selling as travel restrictions ease. But the company’s weaker balance sheet could limit its ability to cash in on the resurgence of travel. Heavy losses have eaten into shareholders’ funds. Full-year results for 2021 show $9.4bn cash at hand, but debt of more than $30bn. These figures don’t provide much comfort “should anything else unexpectedly go wrong”. Maybe holidaymakers will “flock back to cruise ships when Covid-19 fades into the memory and becomes endemic”. But consumers might also feel disinclined to “share a big boat with thousands of other passengers”. 1,504p
Deliveroo
Motley Fool
Online food-delivery company Deliveroo has underperformed the stockmarket so far this year, although it has shown impressive growth. Gross transaction value was up 36% year on year for the three months to 20 January.
“The numbers suggest Deliveroo still has plenty of momentum post-pandemic.” But that doesn’t make it a good buy. Analysts expect the firm to post net losses of £226m and £196m for 2021 and 2022. Tougher regulations in Europe could make gig-economy companies such as Deliveroo reclassify some of their workers as employees, which may raise costs significantly. Rivals such as Uber and Just Eat also
pose a threat. Avoid the stock for now. 149p
...and the rest
Investors’ Chronicle
Software company NCC helps clients get their software up and running should their provider fail. It also has a cybersecurity consultancy service. Last June it acquired US software business IPM for $220m, which will allow it to expand across the Atlantic. Buy (189p). Gambling group Rank runs the Grosvenor casinos and Mecca bingo clubs. These were badly hit by the pandemic, but are enjoying a resurgence. The company “isn’t out of the woods yet”, but could be a recovery play. Hold (162p).
Mail on Sunday
Mears does maintenance work for local authorities and housing associations. Sales and profits for its 2021 financial year will be ahead of market expectations and it has a strong pipeline of work for 2022. Its contracts last for years and are mostly inflation-linked. Buy (215p).
Shares
Revolution Beauty’s shares have dropped more than 25% since September due to Omicron, cost increases and supply-chain disruption. But the make-up, skincare and haircare firm has global growth potential. It has expanded retail distribution and its online arm since floating in July. Buy (118.5p). Online marketing company Dotdigital has had a “violent” ride, hurt by signs of pressure on margins. But a recent update suggests issues are fading. It could be a takeover target at this depressed price. Buy (140p).
The Daily Telegraph
Growth-focused investment trust Scottish Mortgage has been “an obvious casualty” of the shift away from growth stocks and its shares are down by 26% since November. But its long-term record is unmatched. The team has an “exceptional ability to identify disruptive innovators”. Buy (1,173p).
-
Nvidia's earnings live: China trade the key question for semiconductor giant’s resultsAll eyes are on Nvidia’s earnings release this week, as analysts question whether Blackwell sales can make up for lost China revenue following Trump’s trade crackdown
-
8 of the best lakeside properties for saleThe best lakeside properties – from a house on the southeastern shore of Loch Lomond, to a 15th-century hall overlooking a lake in King’s Lynn, Norfolk
-
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.
-
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
-
Trainline: a cheap cash machine for investorsOpinion Trainline’s shares have slumped owing to concerns about growth, but the sell-off seems overdone
-
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
-
'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.
-
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?
-
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.
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
