Share tips of the week – April 1
three to buy
The Sunday Times
We’re living longer, but “our brain can’t always keep up.” Cambridge Cognition manufactures specialized software for brain health assessment tasks in clinical trials. The company is a ‘tiddler’ with a market capitalization of just £35m, but its revenue rose 50% to £10.1m last year when it signed more contracts. clinical trials than at any time in its history. It also made a “very modest” profit and now has a “decent £3.8 million cushion of net cash” thanks to an increase in the number of pre-paid customers for its software. To buy. 142.8p
Home repair service HomeServe has been liquidated due to concerns over its UK growth prospects, but the ‘star performer’ is its US business. Management says revenue from this is ahead of schedule. Meanwhile, the UK branch could benefit from the “current pressure on consumer finances”, which is “likely to encourage more people to take out insurance policies to avoid large repair bills”. The company has a proven operating model, a strong balance sheet and a strong pipeline of acquisitions, all of which should help it grow. 675p
Public transport will play a key role in the government’s goal of achieving net zero emissions. The UK’s climate change committee expects between 9% and 12% of car journeys to switch to bus journeys by 2030. This bodes well for coach company National Express. The company suffered during the pandemic, but got through it “without crippling the balance sheet”.
In the two years to December 2021, net debt fell from £1.22 billion to £1.02 billion. To buy. 224p
Three for sale
Shares of food delivery app Deliveroo are trading at just a third of their listing price of 390p. The company has set a goal of breaking even at some point between the second half of 2023 and the first half of 2024 before turning a profit, but it is struggling with a post-pandemic decline and competitiveness growth in the food delivery market. It has £1.3bn on its balance sheet, more than half of its market cap, but that balance ‘only goes one way’ as it seeks to invest in improving its platform and increase spending marketing. It has also faced a number of legal challenges regarding the status of its workers. To avoid. 113.6p.
An “uncertain outlook for the global economy” is a risk to society’s information and economic exposures. Some countries in Asia and Latin America have yet to recover from the effects of the pandemic, and the remaining travel restrictions in some parts of the world do not bode well for its event business. There’s room for her to increase her subscription revenue and grow her online presence, but she remains too reliant on in-person events. To sell. 549p
Restaurant Group’s main brands, such as Wagamama and Frankie & Benny’s, posted promising numbers, but “financial charges pushed it into the red” and it fell to a third straight annual loss. Incomes are still significantly below 2019 levels and it would be “unwise to underestimate the economic headwinds”, from rising energy costs to labor shortages. There are some positives to take from his latest results, but the future looks too uncertain. To sell. 74p
…and the rest
cineworld has “material uncertainty” about its ability to repay its debt and avoid a “potentially disastrous” bill. To sell (39.1p). funeral provider Dignity the premium assessment seems unwarranted given the likelihood of a lower mortality rate post-pandemic. To sell (445p). German medical conglomerate Fresenius can unlock value by restructuring. To buy (€32.14).
The Sunday Mail
Law office DWF has ambitious expansion plans and a “decent dividend”, with 6.6p forecast for the year. To buy (115p).
Recruiter FDM can “bridge IT skills gaps” for customers investing heavily in digital transformation and security. To buy (1002p). At Warren Buffett’s Berkshire Hathaway is a “sound defensive option”. To buy ($352.50). Essentra gets rid of packaging and filters to become a “streamlined” component company. To buy (310p). Investor in digital infrastructure Cordial digital infrastructure received anti-trust approval for a Polish acquisition that will double its assets. To buy (106.6p).
Many investors believe the discount retailer B&M European value will benefit from the cost of living crisis, but that’s “too simplistic”. Its current low-income customers are likely to cut more than most. To sell (577.4p).
Retailer following expands its online presence and diversifies into new areas such as furniture, paint, wallpaper and skiwear. To buy (6358p). Construction business Henry boot should benefit from the strength of the real estate market. The demand for its industrial and logistics assets should also protect it against inflation. To buy (315p).