Moderator: CIC officers
(Sharecast News) - The Mail on Sunday's Midas column recommended readers 'buy' shares of Braemar Shipping pointing out a raft of reasons why it believed the shipping broker was deeply oversold.
Even if one is mistakenly inclined to look past the company's leadership in the sector, or the trust that comes with a decades-long heritage and good reputation, as recently as April the company itself had said that business had held up despite the onslaught of the pandemic.
Admittedly, the firm had shelved its final dividend, but that was put down more to prudence than concerns around the business and Braemar's chairman, Ron Series, was committed to reinstating it as soon as practicable.
And in any case, a payout of at least 5.0p was anticipated for the year ending on 28 February 2021, putting the stock on a 5% dividend yield.
Furthermore, the payout was anticipated to rise to 7.5p per share for the following year.
More to the point, nearly every shipment requires a broker and Braemar focuses on key commodities for the global economy, such as wheat, soya, oil and steel, Midas said.
You would expect Series to be confident in the company's prospects you say? stockbrokers are too, the tipster pointed out.
"Shipping is a cyclical business but the long-term outlook is benign, particularly as Asian economies pick up steam," Midas said.
"With offices around the world, a global reputation and a robust management team, Braemar is well placed to benefit from underlying industry trends. At 99p, the shares are undervalued. Buy."
If you've not heard of Mpac, you might remember Molins, a tobacco-packaging business founded by a cigar-maker in Havana.
In a wise, but ironic, pivot, the company, which was well known for its sophisticated packaging machines and robots, sold off its tobacco arm, and now parcels up asthma inhalers instead of cigarettes.
Its machines are to be found in factories used by AstraZeneca, GlaxoSmithKline, Unilever and a host of other consumer goods and pharmaceutical businesses.
Mpac is valued for its innovation – this is the company that worked out how to make pyramid-shaped teabags – so it was a relief to see this week that it has now managed to apply that ingenuity in the Covid-19 pandemic, establishing effective social distancing and hygiene practices across its factories, with employees 'working effectively within the new rules'.
The company's presentation at its annual meeting this Wednesday was particularly welcome after a bleaker assessment on March 26, when chief executive Tony Steels cancelled the final dividend of the financial year to December 31, 2019, 'to protect the business and conserve cash during this period'.
The company's shares dropped to £1.75, but they have since bounced back considerably, rising 5 per cent on the day of that statement alone, and now stand at £2.55. So why the optimism?
The company's clients are large and demand for their products continues despite the pandemic.
Big pharmaceutical companies are particularly valuable at present – and no one has stopped drinking tea.
Mpac is fiscally conservative too. The company is debt-free and reported a £5.4 million pre-tax profit for 2019, up from a £7.4 million loss in 2018.
On a price-to-earnings ratio of six, Mpac still doesn't look expensive, and investors can be hopeful that the dividend policy will be reinstated when the coronavirus crisis recedes.
Midas Verdict: Midas tipped Mpac in July last year, when the shares stood at £2.03. It's been a bumpy ride since then, but the shares are already far above that level at £2.55.
Last week's announcement shows that the company has the financial firepower to make it through the next few months.
With Steels at the helm, there's little danger of the company running out of steam. Worth packing away in your portfolio.
JPMorgan Cazenove upgraded its rating on shares of student accommodation provider Unite to 'overweight' from 'neutral' on Wednesday, highlighting four reasons to buy the stock.
JPM said that having fallen 42% year to date, the premium has now moved out of Unite shares and noted a number of reasons to buy the stock "looking through Covid-19 lockdown disruption".
The bank said the shares are as cheap as at any time since 2013. In addition, it said universities are very early on in the disruption cycle and there are no imminent structural impacts from online learning.
JPM also pointed to the fact that a rise in the population of 18-year-olds is expected through to 2030 after several years of decline. Finally, it said purpose-built student accommodation "is a rare winner from changes to UK immigration".
The bank cut its price target on the stock to 900p from 950p.
Buy: 128.00
Year High: 237.00 [31/05/2020]
Year Low: 92.00 [31/05/2020]
Dividend Yield: 4.03% [31/05/2020]
Buy: 275.00
Year High: 375.00 [31/05/2020]
Year Low: 153.00 [31/05/2020]
Dividend Yield: 0.56% [31/05/2020]
Buy: 862.00
Year High: 1,351.00 [31/05/2020]
Year Low: 577.00 [31/05/2020]
Dividend Yield: 3.82% [31/05/2020]
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