Six to buy
Fidelity National Information Services
The Telegraph Also known as FIS, this US fintech specialist has been out of favour ever since it overpaid for rival Worldpay in a 2019 deal. The resulting value destruction has wiped 40% off the shares, but new management is finally cleaning house, including selling a stake in Worldpay to private equity in order to raise cash and reduce debt. The outlook for margins and profits is finally improving, while on 15 times forecast earnings the shares are “cheap for a tech company”. A mooted $4bn share buyback is an added sweetener. $72.50
M&G
Interactive Investor This FTSE 100 savings and investment giant’s unusually high 9.5% dividend yield could be a sign that “something is profoundly wrong”. M&G has been getting little love from the market, with the shares trading on a forward price/earnings (p/e) ratio of eight, compared with 11 for peer Aviva. Yet annual accounts suggest it has “a decent cash chest” to support the payout. Provided “management has its act together”, there are also “good odds of dividend growth”. The shares thus offer attractive income with a chance of capital gains should the price correct to something more sensible. 207p
MercadoLibre
Shares This Uruguay-based, Nasdaqlisted firm is the “Amazon of Latin America”. Its largest markets are Brazil, Mexico and Argentina, with the online marketplace receiving 668 million visits per month. It is leveraging that platform to expand into digital banking – an underserved niche in a region where a fifth of people are unbanked. MercadoLibre’s income has risen tenfold in five years and the return on capital is an impressive 27.9%. Given a dominant market position, the shares offer reasonable value on a forecast 2025 p/e of 32. $1,529
Paragon Banking
Investors’ Chronicle This bank almost went under in 2009, but has since made specialist lending work. It has built a profitable niche in buy-to-let (BTL), with a bias towards the professional end of the market. It enjoys higher overall margins than many rivals. As a smaller lender, it is “nimble” enough to expand the balance sheet opportunistically when conditions are favourable in a way that larger rivals cannot. On a price-to-book value of 0.8, “there is still value to be had”. 674p
Public Policy Holding Company
The Mail on Sunday We live in an era of state meddling. Annual US government spending has soared from $1.8trn in 2000 to $6trn today. With red tape everywhere, business needs a champion.
