Boosted by stimulus and easing of lockdown measures, the FTSE All Share has broadly maintained an upward trajectory in the last few weeks but on a cautionary note, quality stocks are still looking expensive. So, while our screen is flagging several quality stalwarts, investors should take note of the tests that high-ranking companies fail as forecasting profits growth to justify high share prices is incredibly difficult right now.
- No company passes all nine of our tests designed for larger companies. The best (passing 8/9) are gold miner Polymetal International (POLY) – which fails our return on equity growth test; pharma giant GlaxoSmithKline (GSK) which fails on forecast earnings growth; and comparison website Moneysupermarket.com (MONY) which also fails on forecast EPS growth.
- Our tests for smaller companies are proving a tough ask for firms listed on the main market. Aim, however – which is once again close to being valued at £100bn in aggregate – is flagging a load of shares. These include celebrated fashion business boohoo.com (BOO) whose shares were recently subject to a short-seller attack, a reminder that it’s always worth looking behind the numbers before investing, too.
