Six to buy
The Mail on Sunday
Argentex (LSE: AGFX), a foreign-exchange dealer, helps medium-sized firms to navigate overseas markets. Most currency dealers focus on multinationals, with traditional banks maintaining a stranglehold on smaller clients, leaving those in the middle underserved. Argentex offers tailor-made advice and services that help these firms to manage currency risk as they do business across borders. Today it has 1,400 customers, including everything from “supermarkets” to “flower importers and motorbike manufacturers”. The shares listed on Aim in 2019. They pay a modest dividend and “should go far”. 119p
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The Sunday Times
AstraZeneca’s vaccines may make the headlines, but it is the firm’s oncology and rare-disease divisions that should grab investors’ attention. The former already comprises a third of turnover thanks to 13 blockbuster treatments (those with sales of over $1bn). Across oncology, biopharmacy and rare diseases, AstraZeneca (LSE: AZN) has a healthy pipeline of 35 new drugs in first-phase clinical trials and 19 in the final stages. The stock has more than doubled over the past five years, but on a price/earnings (p/e) ratio of less than 16, analysts think the shares are still undervalued. Buy this portfolio ��booster”. 11,177p
Soaring mortgage rates are causing investors to steer clear of housing and construction-related stocks. Yet with shares in Brickability Group (LSE: BRCK), a supplier of building materials, off by almost one-third this year, much of the risk may now be priced in. The firm has pursued a “well-executed acquisition strategy” that has given it a strong position in the UK ahead of an eventual market recovery, and the shares are on a prospective p/e of 6.5 and yield almost 5%. 69p
Shares in motoring and cycling specialist Halfords (LSE: HFD) have slipped as consumers cut back and higher costs eat into margins. Yet the services side is doing much better, with autocentre revenue rising by an annual 70% in the first half. Services are likely to account for more than half of overall group sales in 2024. Halfords’ strategic shift to being “a service-provider-that-does-some-retail” should spare it the worst of the downturn in consumption. 195p
FTSE-250 firm Oxford Instruments (LSE: OXIG) “designs and manufactures equipment used to analyse matter at an atomic level”, a technology needed for everything from advanced materials research to cutting-edge battery development. Margins are robust, a testament to the company’s pricing power in these inflationary times. This high-quality firm delivered a 19% return on equity last year. On 23 times profits the shares aren’t cheap, but the long-term outlook is auspicious. 2,200p
SRT Marine Systems
Shares in SRT Marine Systems (LSE: SRT), a supplier of maritime surveillance kit, have surged of late, but there could be more to come. First-half results included a year-on-year quadrupling in revenue and a £2.1m pre-tax profit. The group has secured a small new coastguard deal and management expects “significant new systems contracts to be announced in the coming months”, says Lorne Daniel of stockbroker FinnCap. On a reasonable 12.6 times FinnCap’s forecast 2023 earnings, even after the latest rally investors still haven’t “missed the boat”. 48p
...and the rest
Document and data management specialist Restore (LSE: RST) is on course for a “full recovery” after two “pandemic-wracked years”, but the shares are still down by almost a third so far this year. The market seems nervous about the impact of dearer money “on its £100m‑plus debts”, while “softer trading in its IT operation” has also undermined confidence. On a forecast price/earnings (p/e) ratio “in the low 20s” the shares still look a “bit exposed”. Sell (320p).
Banknote printer De La Rue’s (LSE: DLAR) third profit warning in ten months suggests the turnaround is not going to plan. The rise of polymer banknotes, which last much longer than paper ones, also means that the group risks cannibalising its own long-term business. Sell (80p).
Recovering sales in China have helped car testing specialist AB Dynamics (LSE: ABDP) to achieve “record order intake and cash profits”. There is scope for further growth as new electric vehicles hit the road. Buy (1,580p).
Demand is booming for bulk annuities, “insurance products which are sold to defined-benefit schemes allowing them to transfer their risk”. That bodes well for self-styled retirement market “disruptor” Just Group (LSE: JUST), which derives 60% of its sales from such products. A fifth of new sales stem from individual annuities. The group is starting to throw off cash. Buy (76p).
Sustainable investment house Impax Asset Management (LSE: IPX) has shrugged off the market downturn thanks to its focus on “stickier” institutional clients. The valuation and the growth potential in environmental, social and governance (ESG)-orientated investments make the shares a buy (772p).
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