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High quality shares to fine tune portfolios

Profit growth outlooks remain uncertain but our screen highlights quality businesses with the power to endure.
High quality shares to fine tune portfolios

The UK stock market may have recovered from its March lows, but there is still little visibility on how the world economy might rebound as countries ease lockdown restrictions. Forecasting company profits is therefore very difficult but there is plenty to be said for looking to high quality businesses that have the resilience to ride out a recession and could come back strongly. 

  • Forecasting earnings per share (EPS) growth for companies is a tricky call for analysts to make now and it is unsurprising that EPS upgrade tests are commonly failed on our FTSE All Share quality screen. No company passed all nine of our tests focussed on large companies, although looking beyond a tough next twelve months, some quality businesses are flagged.
  • Moneysupermarket.com (MONY), pharmaceutical giant GlaxoSmithKline (GSK) and international technical products and services business Diploma (DPLM) only fail on the one-year EPS growth forecast.
  • Gold miner Polymetal (POLY) misses out on full marks because its return on equity (ROE) isn’t higher than two years ago. However, the stock has gone up almost 28 per cent in the last three months as investors have sought out gold-related investments as the world braces itself for the full impact of recession.
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