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AlphaScreens: Building Quality foundations

Property and construction related stocks continue to score well in our Quality screen
AlphaScreens: Building Quality foundations

The Quality stock screen has seen little movement among large caps with just one new entrant this month while across the market companies with direct interest in, or links to, property and construction remain strong scorers. 

  • A total of 14 large cap companies passed all the tests of our Quality screen this month with little change from last month as household name stocks such as Diageo (DGE) continue to score full marks. There was one new arrival as safety equipment manufacturer Halma (HLMA) secured a nine out of nine score on the screen’s tests. The quality label sits comfortably with Halma where consistency of performance has been exceptional – June’s full year results marked a 16th straight year of record revenues and profit. Meanwhile despite the worries over the property and construction markets three of the companies to pass all the screen’s tests are exposed, albeit from different perspectives with German commercial landlord Sirius Real Estate (SRE), UK housebuilder Countryside Properties (CSP) and plastic pipes specialist Polypipe (PLP) all holding on to their top billing.
  • A similar story among the screen’s Small Cap results where brick maker Forterra (FORT) and construction specialist MJ Gleeson (GLE) passing eight of the nine tests but only one company, Devro (DVRO), passed all the tests.
  • Aim was a more fertile hunting ground with six companies passing all the Quality screen criteria, although fishing for ‘quality’ lower down the market is a slightly different game which can be skewed by strong recent momentum in performance rather than the decades of consistent outperformance seen in more mature companies. Biotech Bioventix (BXVP) and Gamma Communications (GAMA) are prime examples of this, with the latter benefitting from several analyst upgrades of late.  
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