Join our community of smart investors

Signs when to peg hopes on quality shares

Good businesses with prospects for strong earnings growth are at a premium.
Signs when to peg hopes on quality shares

As the recent performance of US tech stocks has shown us, buying quality shares is still a good strategy in a crisis, even if they are already expensive. Future growth is all important, however, and the UK market has fewer examples of companies that will be at the vanguard of building the 21st century economy compared to America's Nasdaq exchange. There are still some outstanding companies though and a couple of data-focused businesses with exciting long-term prospects.

  • Out of all the companies listed on the main London market, only gold miner Polymetal (POLY) passes 9/9 of our quality tests this month.
  • Data and analytics business Experian (EXPN), which only narrowly fails the requirement to have increased return on equity over its last two financial years, also ranks highly. The company has enjoyed impressive share price momentum in the last three months, too.
  • Uncertainty about future earnings growth and heightened expensiveness of quality shares are big question marks. This is highlighted by the fact many main market shares ranking well still fail our dividend adjusted price-to-earnings-growth (PEG) test.
  • The Aim market has several more companies with a 9/9 score. Boohoo (BOO) tops the pile but investors should be mindful of developments involving its Leicester suppliers. Another business doing well is YouGov (YOU), which recently joined Phil Oakley’s fantasy portfolios.
Download PDF
To continue reading...
Subscribe to Alpha Today and You’ll Get
  • Unlimited access to all of our content
  • The Analyst's round up of companies and updates on his Fantasy Sipp portfolio
  • Broker style company research notes from our small cap expert Simon Thompson
  • Quality, Momentum, Growth at Reasonable Price (GARP) and Dividend Yield stock screens
  • Algy Hall’s monthly value-momentum investment trust screen and portfolio of diverse closed-end funds
Have an account? Sign in