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Ideas Farm: Rejoice, the Dash for Trash is here!

While highly speculative, the recent dash for trash should be welcomed by investors hoping the market's recovery has legs
Ideas Farm: Rejoice, the Dash for Trash is here!

During the past week or so there has been a spectacular change in fortune for the value investment strategy. 

The chart below shows the performance of the investment styles we monitor over three months, one month, two weeks and one week. While ‘value’ continues to be the loser over three months, over shorter timeframes it leaves all other investment approaches in the dust (‘value’ in the chart represents the average performance of strategies based on backing the cheapest fifth of FTSE All-Share stocks based on: forward price/earnings ratio; price to sales; price to book value; dividend yield; and enterprise value to cash profits). In fact, while the outperformance of ‘value’ looks dramatic over the past month as a whole, for the first two weeks of the month it was actually underperforming the other styles, although it was outperforming the index. In other words, the dramatic recent win for value has really happened within the past two weeks, and the lion’s share of that outperformance appears to have come in the past week. 

It may feel an odd time for value to outperform. Value stocks tend to reflect the inherent weakness of the company that has issued the shares. This often boils down to things such as high debt and significant ‘cyclicality’ (City jargon to describe a company with profits that are very sensitive to economic conditions). It seems strange that these stocks should outperform as the world enters a deep recession.

However, a ‘dash for trash’ is a classic phenomenon when stock markets rebound, which in turn typically happens before any clear signs of an economic recovery have emerged. Indeed, stock markets tend to move in anticipation of events that are furthest from sight rather than those that are readily apparent. 

The ‘dash for trash’ can be seen as another sign that the huge policy response – fiscal and monetary – to the economic impact of coronavirus is being viewed favourably by investors. Importantly, the dash for trash can be regarded as more of a judgement on the economic outlook than a reaction to the increased liquidity provided by central banks. This is because there is a logic to thinking increased liquidity will boost demand for shares in the biggest and safest companies, while investors that want to benefit from an economic recovery will buy shares in companies that have the most to gain from an upturn – the weakest companies with the most beaten-up shares.

Naturally, this move by the market could prove premature. The Covid-induced recession could be longer and more painful than those piling into cheap stocks expect. There are also signs of very speculative punts being taken. But a dash for trash is always a highly speculative phenomenon. This means it takes a bold investor to jump on the bandwagon. Indeed, the psychological difficulties of switching investment style mean most investors are best advised to stick with the style wagon they are already on. More generally, the dash for trash can be regarded as a broadly encouraging sign, given it is a key initial stage in most stock market recoveries. That said, there are still plenty of reasons to remain cynical and wary of bull traps (recoveries that suck in money before blowing up). 

Three of the shares appearing in this week’s tips section come from the ‘trashier’ end of the spectrum. All could see their businesses benefit significantly from a recovery. For upholstery retailer DFS (DFS), not only could an economic revival mean a recovery in demand, but it should also face less competition as weaker rivals fall by the wayside. M&G (MNG), meanwhile, should benefit from any continued market strength and this could make potential value on offer from its unexciting business become more apparent. Finally, BHP’s (BHP) profits are highly sensitive to the price of iron ore and copper, both of which have their fortunes closely wed to the state of the global economy. Encouraging signs from China makes this an interesting time for the company.

Click here to view the tables in PDF form

New 52-week highs  Wednesday, 10 June 2020
NameTIDMPrice% from hi
Manchester & London Investment Trust plcLSE:MNL628p0.0%
YouGov plcAIM:YOU790p1.3%
Personal Assets Trust plcLSE:PNL44,150p1.3%
Pebble Beach Systems Group plcAIM:PEB12p1.6%
Fulcrum Utility Services LimitedAIM:FCRM31p1.6%
Amryt Pharma plcAIM:AMYT148p1.7%
Oxford Biomedica plcLSE:OXB810p1.7%
Caledonia Mining Corporation PlcAIM:CMCL1,305p1.9%
Aberdeen Standard European Logistics Income PLCLSE:ASLI103p1.9%
Aberdeen Japan Investment Trust PLCLSE:AJIT638p1.9%
Watchstone Group plcAIM:WTG179p2.0%
Pershing Square Holdings, Ltd.LSE:PSH1,974p2.0%
Smithson Investment Trust PLCLSE:SSON1,464p2.1%
Jersey Electricity plcLSE:JEL477p2.3%
Allianz Technology Trust PLCLSE:ATT2,140p2.3%
Volvere plcAIM:VLE1,560p2.3%
Baillie Gifford European Growth Trust plcLSE:BGEU1,040p2.3%
Stock Spirits Group PLCLSE:STCK252p2.3%
Venture Life Group plcAIM:VLG73p2.7%
Civitas Social Housing PLCLSE:CSH109p2.7%
Scottish Mortgage Investment Trust PLCLSE:SMT734p2.8%
Spirax-Sarco Engineering plcLSE:SPX9,922p2.8%
Gore Street Energy Storage Fund PlcLSE:GSF101p2.8%
Baillie Gifford US Growth Trust PLCLSE:USA193p2.9%
The Monks Investment Trust PLCLSE:MNKS1,006p2.9%
Cardiff Property PlcLSE:CDFF1,725p3.0%
Numis Corporation PlcAIM:NUM311p3.0%

Source: S&P Capital IQ


New 52-week lows  Wednesday, 10 June 2020
NameTIDMPrice% from lo
Craven House Capital PlcAIM:CRV85p0.0%
DWF Group plcLSE:DWF65p0.8%
Impellam Group PLCAIM:IPEL234p0.9%
Pittards plcAIM:PTD42p2.4%

Source: S&P Capital IQ


Shorts  Wednesday, 10 June 2020
CompanyShort InterestNo. Shorters1wk chg in short interest
HAMMERSON PLC10.7%6-1.8%
Royal Mail Plc8.7%70.6%
TULLOW OIL PLC7.2%5-0.8%
PEARSON PLC7.2%80.6%
METRO BANK PLC5.9%3-0.8%
EASYJET PLC5.8%5-2.4%
CAPITA PLC5.4%4-0.1%
IQE PLC4.8%30.0%
DIGNITY PLC4.6%30.2%
SAINSBURY (J) PLC4.4%30.3%
PETROFAC LTD4.2%3-0.9%
FUTURE PLC4.1%3-0.1%
TUI AG3.9%4-0.2%
AGGREKO PLC3.4%30.0%
A.G. Barr PLC3.1%20.1%
Signature Aviation Plc3.0%50.5%
VICTREX PLC3.0%40.5%
Primary Health Properties PLC3.0%40.0%
VALARIS PLC2.8%10.0%
AA PLC2.7%30.0%
TED BAKER2.6%30.0%

Source: FCA


Wednesday, 10 June 2020FWD EPS CHG
Luceco plcLSE:LUCE75.8%-44.2%-38%
McCarthy & Stone plcLSE:MCS68.2%-86.9%-
Ramsdens Holdings PLCAIM:RFX56.7%-53.4%-54%
IGas Energy plcAIM:IGAS50.0%-84.3%-85%
IWG plcLSE:IWG47.6%-79.9%-79%
Titon Holdings PlcAIM:TON37.6%37.6%-27%
Frasers Group plcLSE:FRAS35.5%-48.2%-26%
Orchard Funding Group plcAIM:ORCH29.7%29.7%-24%
Venture Life Group plcAIM:VLG27.5%62.7%74%
Bloomsbury Publishing plcLSE:BMY24.1%-48.8%-51%
Watches of Switzerland Group PLCLSE:WOSG23.1%-39.9%-
EKF Diagnostics Holdings plcAIM:EKF22.4%27.5%34%
SDX Energy plcAIM:SDX20.7%-43.5%-69%
Mattioli Woods plcAIM:MTW18.6%18.6%12%
Frontier Developments plcAIM:FDEV15.3%24.3%35%
McBride plcLSE:MCB14.4%14.1%-
Ebiquity plcAIM:EBQ13.6%-49.5%-50%
Joules Group PlcAIM:JOUL10.2%-33.2%-57%
Totally plcAIM:TLY9.9%9.9%900%
boohoo group plcAIM:BOO9.4%-8.1%8%
IntegraFin Holdings plcLSE:IHP8.7%-5.8%-6%
Playtech plcLSE:PTEC8.2%-33.6%-68%
Legal & General Group PlcLSE:LGEN8.1%-6.2%-1%
Zotefoams plcLSE:ZTF8.0%-29.2%-51%
Zotefoams plcLSE:ZTF8.0%-29.2%-51%
Warpaint London PLCAIM:W7L7.7%7.7%-43%
XP Power LimitedLSE:XPP7.7%-7.6%-20%
XP Power LimitedLSE:XPP7.7%-7.6%-20%
Shield Therapeutics plcAIM:STX7.3%220.9%-
B&M European Value Retail S.A.LSE:BME6.9%3.3%-
Alfa Financial Software Holdings PLCLSE:ALFA6.3%-63.9%-87%
Focusrite PlcAIM:TUNE6.2%6.7%26%
Young & Co.'s Brewery, P.L.C.AIM:YNGA5.4%-16.5%-17%
Young & Co.'s Brewery, P.L.C.AIM:YNGA5.4%-16.5%-17%
Rio Tinto GroupLSE:RIO5.2%-2.9%-9%
Team17 Group PLCAIM:TM175.2%8.8%45%
Serabi Gold plcAIM:SRB4.8%-5.3%-
IG Group Holdings plcLSE:IGG4.5%34.5%-
TalkTalk Telecom Group PLCLSE:TALK4.2%0.9%-
Warehouse REIT plcAIM:WHR4.1%-16.1%-2%
Petropavlovsk PLCLSE:POG3.8%21.8%-
AJ Bell plcLSE:AJB3.8%-5.2%-8%
Sirius Real Estate LimitedLSE:SRE3.7%-11.9%-1%
Standard Life Aberdeen plcLSE:SLA3.6%-23.3%-37%
Chemring Group PLCLSE:CHG3.5%-3.2%0%
Polar Capital Holdings plcAIM:POLR3.5%-10.0%-
De La Rue plcLSE:DLAR3.2%3.2%-71%
Halfords Group plcLSE:HFD3.1%-29.0%-
YouGov plcAIM:YOU3.1%-4.7%3%

Source: S&P Capital IQ


Wednesday, 10 June 2020FWD EPS CHG
Cineworld Group plcLSE:CINE-98.8%-99.4%-100%
Hyve Group PlcLSE:HYVE-92.3%-93.2%-94%
Johnson Service Group PLCAIM:JSG-88.5%-96.5%-96%
The Restaurant Group plcLSE:RTN-88.4%-99.6%-100%
Renewi plcLSE:RWI-87.9%-90.2%-93%
MJ Hudson Group plcAIM:MJH-84.1%--
Hostelworld Group plcLSE:HSW-82.4%-86.2%-90%
TI Fluid Systems plcLSE:TIFS-80.5%-92.3%-94%
Henry Boot PLCLSE:BOOT-73.4%-73.4%-74%
Oxford Biomedica plcLSE:OXB-70.5%-51.2%-89%
Draper Esprit plcAIM:GROW-68.4%-68.4%-72%
The Vitec Group plcLSE:VTC-63.8%-82.6%-87%
MJ Gleeson plcLSE:GLE-62.3%-77.1%-77%
Biffa plcLSE:BIFF-61.8%-74.7%-74%
Card Factory plcLSE:CARD-58.1%-81.9%-86%
Fuller, Smith & Turner P.L.C.LSE:FSTA-57.9%-69.3%-
Blancco Technology Group plcAIM:BLTG-52.0%-59.1%-59%
C&C Group plcLSE:CCR-51.8%-70.8%-
Amigo Holdings PLCLSE:AMGO-48.5%-52.1%-
Iofina plcAIM:IOF-47.3%-47.3%-2%
J D Wetherspoon plcLSE:JDW-46.6%--
Beazley plcLSE:BEZ-46.0%-95.6%-97%
Polypipe Group plcLSE:PLP-42.5%-51.9%-54%
Countryside Properties PLCLSE:CSP-41.8%-50.1%-51%
Costain Group PLCLSE:COST-40.5%-61.5%-81%
NEXT plcLSE:NXT-40.4%-83.4%-83%
Howden Joinery Group PlcLSE:HWDN-37.6%-46.5%-45%
Vivo Energy plcLSE:VVO-37.2%-48.1%-55%
M.P. Evans Group plcAIM:MPE-36.5%-18.4%-29%
Mears Group plcLSE:MER-36.5%-61.4%-64%
Hollywood Bowl Group plcLSE:BOWL-36.4%-75.0%-74%
Morgan Sindall Group plcLSE:MGNS-36.3%-52.2%-50%
Grafton Group plcLSE:GFTU-36.3%-57.8%-65%
Hochschild Mining plcLSE:HOC-35.6%-50.7%-37%
Hunting PLCLSE:HTG-34.5%-86.1%-92%
Harworth Group plcLSE:HWG-33.1%-22.8%5%
Marshalls plcLSE:MSLH-32.8%-48.2%-48%
Balfour Beatty plcLSE:BBY-32.3%-48.2%-49%
Royal Mail plcLSE:RMG-32.0%-52.1%-
Pets at Home Group PlcLSE:PETS-30.9%-31.1%-26%
Ibstock plcLSE:IBST-30.7%-57.1%-62%
Forterra plcLSE:FORT-29.9%-61.0%-65%
Empiric Student Property plcLSE:ESP-29.5%-54.9%-56%
Gem Diamonds LimitedLSE:GEMD-29.1%-85.1%-92%
Capital & Counties Properties PLCLSE:CAPC-28.5%-70.6%-54%
Coats Group plcLSE:COA-28.3%-66.7%-70%
ASA International Group PLCLSE:ASAI-27.7%-40.3%-46%
Crest Nicholson Holdings plcLSE:CRST-26.8%-49.4%-61%
DWF Group plcLSE:DWF-26.6%-46.0%-
Centrica plcLSE:CNA-26.2%-47.2%-63%
Travis Perkins plcLSE:TPK-24.6%-52.9%-54%
Mitie Group plcLSE:MTO-24.5%-29.8%-
Intermediate Capital Group plcLSE:ICP-24.4%-35.5%-26%
The Go-Ahead Group plcLSE:GOG-24.3%-46.8%-47%
Bushveld Minerals LimitedAIM:BMN-24.0%-28.7%-
Lloyds Banking Group plcLSE:LLOY-23.9%--
Airtel Africa PlcLSE:AAF-23.2%-38.4%-
First Derivatives plcAIM:FDP-23.0%-31.8%-33%
Clarkson PLCLSE:CKN-22.3%-30.4%-37%
Investec GroupLSE:INVP-22.3%-46.0%-48%
Taylor Wimpey plcLSE:TW.-22.3%-41.5%-43%
RPS Group plcLSE:RPS-21.9%-53.7%-68%
Town Centre Securities PLCLSE:TOWN-21.8%-35.6%-39%
Helical plcLSE:HLCL-20.5%-52.2%-55%
Vodafone Group PlcLSE:VOD-20.2%-25.3%-35%
Petrofac LimitedLSE:PFC-20.1%-39.5%-55%
N Brown Group plcLSE:BWNG-20.0%-22.6%-
Close Brothers Group plcLSE:CBG-19.9%-35.2%-39%
DFS Furniture plcLSE:DFS-19.0%-93.7%-
Keystone Law Group plcAIM:KEYS-18.9%-37.2%-39%
Kainos Group plcLSE:KNOS-18.8%-25.7%-27%
3i Group plcLSE:III-18.7%-25.6%-24%
CRH plcLSE:CRH-18.6%-34.8%-38%
Vistry Group PLCLSE:VTY-18.4%-43.7%-35%
PageGroup plcLSE:PAGE-18.3%-51.5%-65%
Shaftesbury PLCLSE:SHB-18.2%-44.3%-49%
Smith & Nephew plcLSE:SN.-18.2%--
Hays plcLSE:HAS-17.9%-59.3%-
Dignity plcLSE:DTY-17.1%-38.3%-43%
PayPoint plcLSE:PAY-16.2%-33.1%-37%
Dixons Carphone plcLSE:DC.-16.1%-38.4%-
Randall & Quilter Investment Holdings LtdAIM:RQIH-15.6%-15.6%-21%
Virgin Money UK PLCLSE:VMUK-15.3%--
Persimmon PlcLSE:PSN-15.0%-36.5%-39%
Glencore plcLSE:GLEN-15.0%-74.5%-88%
Games Workshop Group PLCLSE:GAW-14.8%-26.3%-17%
Restore plcAIM:RST-14.5%-46.3%-47%
Volution Group plcLSE:FAN-14.1%-33.8%-34%
Vesuvius plcLSE:VSVS-14.0%-41.1%-56%
GCP Student Living plcLSE:DIGS-13.8%-34.0%-39%
Numis Corporation PlcAIM:NUM-13.7%-20.5%-
Central Asia Metals plcAIM:CAML-13.5%-36.6%-50%
InterContinental Hotels Group PLCLSE:IHG-13.5%-62.2%-66%
Network International Holdings plcLSE:NETW-13.1%-47.5%-50%
Breedon Group plcAIM:BREE-12.8%-33.9%-35%
Signature Aviation plcLSE:SIG-12.6%-64.7%-76%
Kingfisher plcLSE:KGF-12.3%-21.8%-
Marks and Spencer Group plcLSE:MKS-12.2%-56.9%-62%
Great Portland Estates PlcLSE:GPOR-12.1%-23.1%-19%
Hill & Smith Holdings PLCLSE:HILS-12.0%-28.9%-31%
Ricardo plcLSE:RCDO-11.8%-17.9%-39%
Paragon Banking Group PLCLSE:PAG-11.5%-19.0%-22%
Associated British Foods plcLSE:ABF-11.3%--
Duke Royalty LimitedAIM:DUKE-11.0%-11.5%-23%
Tesco PLCLSE:TSCO-10.9%-18.9%-18%
FirstGroup plcLSE:FGP-10.8%-53.1%-
intu properties plcLSE:INTU-10.8%-55.8%-68%
Standard Chartered PLCLSE:STAN-10.7%--
BP p.l.c.LSE:BP.-10.5%--
Workspace Group plcLSE:WKP-10.1%-35.0%-36%
Renew Holdings plcAIM:RNWH-9.9%-13.6%-12%
Keller Group plcLSE:KLR-9.6%-28.1%-36%
Stagecoach Group plcLSE:SGC-9.6%-22.1%-23%
Mondi plcLSE:MNDI-9.5%-27.1%-42%
Barclays PLCLSE:BARC-9.5%--
Tyman plcLSE:TYMN-9.5%-53.7%-62%
Morses Club PLCAIM:MCL-9.5%-17.1%-
Essentra plcLSE:ESNT-9.4%-37.0%-48%
AA plcLSE:AA.-9.3%-32.3%-35%
The Unite Group plcLSE:UTG-9.1%-51.6%-48%
McKay Securities PlcLSE:MCKS-9.1%-18.2%-19%
Science in Sport plcAIM:SIS-9.1%-9.1%-99%
Ashtead Group plcLSE:AHT-8.9%-34.7%-
Severn Trent PlcLSE:SVT-8.8%-13.0%-10%
Spectris plcLSE:SXS-8.8%-31.6%-41%
Watkin Jones PlcAIM:WJG-8.5%-12.2%-10%
Coca-Cola HBC AGLSE:CCH-8.5%-31.9%-33%
Morgan Advanced Materials plcLSE:MGAM-8.2%-31.8%-34%
Experian plcLSE:EXPN-8.1%-19.3%-20%
Royal Dutch Shell plcLSE:RDSA-8.0%--
British Land Company PlcLSE:BLND-7.7%-22.6%-25%
The Berkeley Group Holdings plcLSE:BKG-7.7%-20.8%-
Land Securities Group plcLSE:LAND-7.4%-21.3%-23%
Barratt Developments PLCLSE:BDEV-7.2%-32.3%-
JD Sports Fashion plcLSE:JD.-7.2%-32.2%-
Renishaw plcLSE:RSW-7.1%-28.0%-
Big Yellow Group PlcLSE:BYG-7.1%-12.5%-17%
AFH Financial Group PlcAIM:AFHP-7.1%-7.1%-12%
Royal Dutch Shell plcLSE:RDSB-7.1%--
Advanced Medical Solutions Group plcAIM:AMS-7.0%-31.3%-33%
Redde Northgate plcLSE:REDD-7.0%-13.5%-
Senior plcLSE:SNR-7.0%-58.2%-80%
Pearson plcLSE:PSON-7.0%-28.9%-47%
Knights Group Holdings plcAIM:KGH-7.0%-7.0%-6%
Sigma Capital Group plcAIM:SGM-6.9%-31.3%-35%
Capital Drilling LimitedLSE:CAPD-6.5%-11.3%9%
Gateley (Holdings) PlcAIM:GTLY-6.4%-9.2%-
TT Electronics plcLSE:TTG-6.3%-35.0%-45%
Dunelm Group plcLSE:DNLM-6.2%-22.9%-16%
Smart Metering Systems plcAIM:SMS-6.2%-38.4%-49%
Begbies Traynor Group plcAIM:BEG-6.1%-6.1%-
Loungers plcAIM:LGRS-6.0%-48.0%-45%
James Fisher and Sons plcLSE:FSJ-5.8%-29.1%-31%
Instem plcAIM:INS-5.7%-5.7%2%
Tate & Lyle plcLSE:TATE-5.7%-13.8%-12%
Burford Capital LimitedAIM:BUR-5.5%-18.0%-25%
Burberry Group plcLSE:BRBY-5.5%-37.5%-40%
Drax Group plcLSE:DRX-5.5%-15.0%-17%
Informa plcLSE:INF-5.4%-47.4%-50%
Residential Secure Income plcLSE:RESI-5.4%-21.9%-13%
Bellway p.l.c.LSE:BWY-5.3%--
Mediclinic International plcLSE:MDC-5.3%-14.4%-23%
Intertek Group plcLSE:ITRK-5.2%-21.0%-26%
Kier Group plcLSE:KIE-5.0%-24.3%-
HomeServe plcLSE:HSV-5.0%-8.4%-5%
John Wood Group PLCLSE:WG.-4.9%-50.7%-62%
Electrocomponents plcLSE:ECM-4.8%-28.9%-35%
Rightmove plcLSE:RMV-4.7%-40.6%-42%
HSBC Holdings plcLSE:HSBA-4.5%--
Pan African Resources PLCAIM:PAF-4.4%2.7%-
Rathbone Brothers PlcLSE:RAT-4.3%-31.2%-39%
United Utilities Group PLCLSE:UU.-4.3%-12.1%-2%
Ascential plcLSE:ASCL-4.1%-78.5%-80%
Johnson Matthey PlcLSE:JMAT-4.1%-22.0%-
ITV plcLSE:ITV-4.1%-32.5%-37%
Judges Scientific plcAIM:JDG-4.0%-30.7%-22%
Auto Trader Group plcLSE:AUTO-4.0%-21.8%-
KAZ Minerals PLCLSE:KAZ-3.9%-27.6%-44%
Sabre Insurance Group PlcLSE:SBRE-3.9%-2.8%-14%
EVRAZ plcLSE:EVR-3.8%-45.9%-59%
QinetiQ Group plcLSE:QQ.-3.7%-9.8%-3%
Dechra Pharmaceuticals PLCLSE:DPH-3.7%-5.4%-
National Express Group PLCLSE:NEX-3.4%-69.0%-69%
Micro Focus International plcLSE:MCRO-3.4%-6.4%-40%
Gooch & Housego PLCAIM:GHH-3.3%-34.5%-44%
Connect Group PLCLSE:CNCT-3.2%-10.3%-21%
SEGRO PlcLSE:SGRO-3.2%-8.7%-8% Group PLCLSE:MONY-3.2%-10.6%-14%
Anglo American plcLSE:AAL-3.0%-32.1%-31%
Rentokil Initial plcLSE:RTO-3.0%-22.4%-24%

Source: S&P Capital IQ

Click here to view the tables in PDF form