As I write this on Monday, the market is having a bit of a wobble. This appears to be due to renewed fears that the Covid-19 pandemic may not be under control after all. Naturally I have no idea how likely any of the possible outcomes are. 

What interests me more is that Monday’s losses - if they are not quickly reversed - have cut the price of the two stocks I’m looking at this week.

This week’s featured stock is toy firm Character (LON:CCT), whose shares closed down by around 5% on Monday. I’ll look at Character in a moment, but first I want to consider utility group Drax (LON:DRX).

Back in June, I reviewed Drax in this piece and concluded that if the shares dropped below 400p, then they would pass all of my screening criteria. At that level, I said I’d consider adding Drax to SIF.

We are now there - Drax’s share price is 394p at the time of writing. So I’ll follow through on my comments from last month and will add Drax shares to SIF and my own holdings after this article has been published

Character Group: reborn?

AIM-listed toy company Character Group has recently appeared in the results of my SIF stock-buying screen. The company owns or produces under licence many popular toy ranges, including Peppa Pig, Fireman Sam, Stretch Armstrong and Goo Jit Zu.

This £145m group is a business that I’ve followed for a number of years. It’s historically offered high returns on capital, strong cash generation and owner management. Three current directors appear on the list of top shareholders:

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Character has already made one previous appearance in SIF in 2018/19, but this was not entirely successful. SIF’s holding was sold at a loss in August 2019 when Character’s share price crashed following the acquisition of Peppa Pig owner Entertainment One by US toy firm Hasbro

At the time, Peppa was one of Character’s biggest sellers, but it was feared that the deal would see Hasbro take Peppa in house. 

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So far at least, this hasn’t happened. Peppa Pig remains a big seller for Character and in January the company said it had extended its current contract for Peppa wooden…

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