This week, I’m starting to populate the Stock in Focus portfolio. To get the ball rolling I am going to add two stocks this week, one cyclical and one defensive.

One of these will be a company I’ve recently reviewed, while the other is a new choice. These will be selected from my screen results using their StockRank. I’m not using StockRanks to populate my screen because this would end up with me creating a duplicate of the NAPs portfolio. Instead, I am going use StockRanks to sort the screen results and select the next stock to be purchased.

So far, my screening criteria have produced a set of stocks with ranks varying from 64 to 99. All but three of the stocks which currently qualify have a StockRank of more than 80. I’m pleased about this, given the StockRanks’ strong performance to date.

Will cyclical momentum continue?

At the time of writing on Tuesday, two stocks are tied for top place in my screen. Although they are obviously different, Persimmon and Alumasc are both cyclical construction stocks with a StockRank of 99. I looked at Persimmon on 6 April and Alumasc on 13 January.

I’ve opted for Persimmon and not Alumasc because of the latter’s £19.5m pension deficit. This is more than four times last year’s net profit of £4.4m. Alumasc is currently paying £2.5m per year (more than half its profits) into its pension scheme, but this has not yet done much to reduce the deficit. These payments were also due to be reassessed following the pension scheme’s triennial valuation in March. Although I quite like Alumasc, I’m not keen on the risks involved here.

Persimmon has no pension deficit and is planning to return £9 per share to shareholders by 2022. Net cash currently accounts for more than 10% of the market cap, providing solid backing for the 5.9% forecast yield.

Although I am generally cautious about the housing market, Persimmon’s appeal is hard to ignore. It remains one of the most-screened stocks on Stockopedia, qualifying for nine screens.

The only news since my original article is a trading update from 14 April. Although this suggested that growth rates might be moderating, the outlook for the year remains unchanged and broker forecasts have…

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