SIF Portfolio: 3 new foreign stocks + small-cap specialist Miton revisited

Tuesday, Jun 05 2018 by
10
SIF Portfolio 3 new foreign stocks  smallcap specialist Miton revisited

Last November I launched an international version of the SIF portfolio using a slightly modified set of rules. This virtual portfolio now holds 21 stocks out of a target of 24, so it’s nearly up to size.

At the end of May, I added three new foreign stocks. There wasn’t space to include these in last week’s monthly review, so this week I’m going to provide a short summary of each before moving on to consider a new stock for the main UK SIF portfolio.

To start things off, here’s a snapshot of how the International SIF looked on 1 June:

5b16736b42e70S1.png

This portfolio is seeing much bigger gains and losses than the UK-only SIF portfolio. I’m not sure why yet, but it will be interesting to see how this affects overall portfolio returns.

Two of my May picks came from the EU which should helping to bolster the European influence in the portfolio. The third is from the USA. All three have Super Stock status and a StockRank of at least 98.

Granges AB (STO:GRNG)

This £750m Swedish firm is the kind of specialist engineer you might find in the FTSE 250. It produces rolled aluminium products such as heat exchangers, transformer windings and food containers.

My main concern with this business was that it might be too dependent on the automotive sector, to which I already have exposure through Faurecia SA. However, the recent acquisition of Noranda has reduced automotive sales from “almost 90%” to “around half”, according to the Granges website.

Financially, all looks good. Net profit has doubled since 2013, but return on capital employed has remained fairly stable, with a five-year average of 13%. Net debt is less than three times net profit, and the stock’s forecast P/E of 11 seems reasonable. There’s also a forecast yield of 2.7% covered 3 times by earnings.

Evonik Industries AG (ETR:EVK)

German group Evonik Industries is a £12bn chemicals group which operates in sectors including consumer goods, healthcare and various industrial markets.

Profit growth has been inconsistent in recent years, but a strong result is expected this year.

5b16739c3a5deS2.png

The broker consensus trend also shows encouraging momentum:

5b1673ad9acbbS3.png

A forecast P/E of 13 and 4% yield seem…

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Granges AB is a Sweden-based aluminum company. It specializes in rolled aluminum products for the manufacture of brazed heat products. The Company directs its offer to original equipment manufacturers (OEM), supporting them in product development. Its key competences include: brazing and processing, mechanical properties, corrosion, and lubrication, chemistry and surfaces. The Company has research and development (R&D) and production facilities in Sweden and China. more »

STO Price
SEK124
Change
5.0%
Mkt Cap (£m)
769.5
P/E (fwd)
11.1
Yield (fwd)
2.8

Evonik Industries AG (Evonik) is a Germany-based specialty chemicals company that operates in four segments: The Nutrition and Care segment produces specialty chemicals, mainly for use in consumer goods for daily needs and food, as well as nutrition for animal food and healthcare products; the Resource Efficiency segment offers material solutions for environment-friendly and energy-efficient products used in the automotive, adhesives and construction industries, among others; the Performance Materials segment produces polymer materials and their intermediates, mainly for the rubber, plastics and agriculture sectors, and the Services segment comprises site management, utilities and waste management, as well as technical, process technology, engineering and logistics services for the chemicals segments and external customers at the Company's sites. Its majority shareholder is RAG Stiftung. more »

GER Price
€30
Change
-1.6%
Mkt Cap (£m)
12,393
P/E (fwd)
12.9
Yield (fwd)
3.9

Best Buy Co., Inc. is a provider of technology products, services and solutions. The Company offers products and services to the customers visiting its stores, engaging with Geek Squad agents, or using its Websites or mobile applications. It has operations in the United States, Canada and Mexico. The Company operates through two segments: Domestic and International. The Domestic segment consists of the operations in all states, districts and territories of the United States, under various brand names, including Best Buy, bestbuy.com, Best Buy Mobile, Best Buy Direct, Best Buy Express, Geek Squad, Magnolia Home Theater, and Pacific Kitchen and Home. The International segment consists of all operations in Canada and Mexico under the brand names, Best Buy, bestbuy.com.ca, bestbuy.com.mx, Best Buy Express, Best Buy Mobile and Geek Squad. As of December 31, 2016, the Company operated 1,200 large-format and 400 small-format stores throughout its Domestic and International segments. more »

NYQ Price
$77.06
Change
3.0%
Mkt Cap (£m)
15,761
P/E (fwd)
14.5
Yield (fwd)
2.4



  Is STO:GRNG fundamentally strong or weak? Find out More »


9 Comments on this Article show/hide all

GAJA1 7th Jun 1 of 9

Hello Roland, Is the price paid 1789.5 for EZJ right as this is not apparent on price history of the stock for 22nd May.Thanks

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JollyBiologist 7th Jun 2 of 9

Many thanks for this, Roland. Always interesting and insightful. The question that puzzles me about Miton is, am I better off owning shares in Miton itself or investing in one of their products. Anyone got any thoughts?

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Roland Head 7th Jun 3 of 9

In reply to post #371124

Hello Gaja1,

The prices paid on fantasy fund trades are based on actual reported LSE trades, so I assume that someone paid 1789.5p on 22 May. You can read more about how Fantasy Fund trades are priced here:

https://help.stockopedia.com/community-guide/participating/fantasy-funds

As a reminder, SIF is a virtual fund. Although I do own most of these stocks myself, the trades shown on the SIF fund page (https://www.stockopedia.com/fantasy-funds/stock-in-focus-portfolio-6449/) are simulated trades and don't represent actual transactions.

Regards,
Roland

Disclosure: I own shares of easyJet.

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Roland Head 7th Jun 4 of 9

In reply to post #371144

Thanks for your comment, JollyBiologist.

This is a perennial question for asset manager stocks! I guess the answer depends on your investment goals and the other assets in your portfolio.

Investing directly in Miton (LON:MGR) stock would give a very different level of risk and asset exposure to investing in one of the group's funds.

Regards,
Roland

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Howard Adams 7th Jun 5 of 9

Hi Roland

Very interesting read as usual, thank you.

Very small point.

Would you be able to add the country flag to your International Portfolio say just after the stock name column?

Regards
Howard

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Timmytrump 7th Jun 6 of 9

Hi Roland

Your articles always interest me as I have a € portfolio based upon the NAPS system.

Your ideas for foreign stocks are great and I add them to my watchlist.

Keep up the good work.

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Roland Head 7th Jun 7 of 9

In reply to post #371284

Hi Howard,

Thanks for your feedback. The country flag is actually shown in the portfolio already, unfortunately I cropped it out in an effort to make the text more easily readable within the width of the page!

I'll leave the flags in next time and see if I can remove any columns to make the table more legible.

Regards,
Roland

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Howard Adams 7th Jun 8 of 9

In reply to post #371304

Hi Roland

Ok, now I appreciate your challenge.

No worries if you cannot fit it in.

Just a suggestion, maybe volume column(s) are less important for such a snap shot report.

Regards
Howard

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Roland Head 7th Jun 9 of 9

In reply to post #371334

Hi Howard, I agree, I've just removed the volume column!

Regards,
Roland

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About Roland Head

Roland Head

Private investor & writer on stock markets with a particular fondness for free cash flow, dividends and value, plus an interest in resource stocks. In earlier life, I worked as an engineer in telecoms and IT. The quantitative, rule-based mindset required for this type of work is probably reflected in my investment style.  Another factor that affects my investment choices is my experience working for a large telecoms company at the turn of the century, when tech stocks were booming. Watching this bubble inflate and then implode from the inside was very educational. more »

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