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Quality sin stocks and problem solvers

Vices aren't a bad thing to invest in according to our quality shares screen.
Quality sin stocks and problem solvers
  • Tobacco and drinks feature prominently in this month's quality screen
  • Companies that solve problems also stand out

Our first Alpha quality screen of 2022 is topped by tobacco giant Imperial Brands (IMB), which out of all the FTSE All Share companies that doesn’t fail a test has the best combination of three-month share price momentum and operating margin. The defensive characteristics of this so-called sin stock may appeal to some investors who are worried about head winds to a smooth economic restart. The dividend is also attractive especially in times of rocketing inflation, as although nominal bond yields are set to rise, in real terms safer government debt doesn’t offer a great income. 

Along with tobacco, high quality alcoholic beverages are present at the quality shares party, with Diageo (DGE) passing all but one test (for margin growth). Britvic (BVIC) might be making the mixers, but if one were to extend the sin stock theme to this business it would probably be for sugar in drinks. It also fails the margin growth test but otherwise the showing against our screen rules reinforces the shares’ quality credentials. 

One recurring theme in our quality screens is for companies that produce tools and solutions for their customers. Data business Experian (EXPN) is the only other FTSE All Share company scoring 9/9 this month, and it falls into the solutions category. Other high-ranking companies that do too include science and technology equipment provider Oxford Instruments (OXIG) and Hikma Pharmaceuticals (HIK)  

Our Aim screen is still topped by software as a service (SaaS) solutions provider iEnergizer (IBPO). Another company with a technological focus that achieves full marks is Eckoh (ECK), a small business that provides payment and customer interaction solutions for clients.  

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