Sunday share tips: Gresham House, Relx
By Alexander Bueso
Date: Sunday 19 Jul 2020
(Sharecast News) - The Mail on Sunday's Midas column touted the long-term potential for Gresham House, the green investor, including for its dividend payout.
Among its the outfit's investments were real asset funds, which invest in areas such as forestry, sustainable housing and renewable energy, as well as funds investing in private equity or venture capital.
The investment company owns 320,000 acres of forest land across Britain and planted over four million trees in 2019, which combined captured an estimated 1.5m tonnes of carbon from the atmosphere.
It was also Britain's largest forest asset manager and its wind and solar parks generated 415,000MWh annually, enough to power over 110,000 homes.
Run by Tony Dalwood, a highly-successful investment veteran, since 2015, its market value had jumped from £12m to nearly £200m at present.
"At £6.28, the shares should deliver robust, long-term value," said Midas.
Dalwood had a well-defined strategy, a team with more than 80 years' combined experience and his ambition was to double the size of the business by 2025, both organically and through acquisitions.
Gresham was also the leading player in the battery storage sector, allowing renewable energy to be stored instead of having to be used immediately or lost, and has investments in waste recycling and vertical farms.
The pandemic has seen many of its funds lose money in 2020, but the firm has also won plenty of new business.
Topping it all off, the 4.5p per share dividend in 2019 is expected to see a "decent" increase in 2020 and beyond.
"Gresham House has made impressive progress since Dalwood took the helm but the best is yet to come," Midas said.
"Interest in the environment has surged in recent months and that trend is likely to persist well after lockdowns ease. For long-term investors, Gresham shares offer an opportunity to make money and do good at the same time."
Jill Treanor of the Sunday Times says investors should 'hold' onto their shares in Relx until the current clouds from the Covid-19 pandemic lift.
In particular, she points out Deutsche Bank's "bleak" prognosis for the firm's events arm, which typically accounts for 16% of sales and 13% or profits.
"Even if shows start to resume in the fourth quarter, the risk of a second wave of infections and a general reluctance to travel could keep activity subdued into next year as well," Treanor said.
Nonetheless, even Deutsche believes that, in the long-run, trade shows will again become money-spinners, returning to something aking to normality towards 2022.
As well, as recently as April, Relx;s three biggest divisions - scientific, technical and medical; risk solutions and business information; and legal - were all trading ahead of the previous year.
That is significant because combined they represented 84% of group sales and 87% of operating profits.
Furthermore, while the company's chairman, Anthony Habgood, is set to leave, he will remain until a successor is found.
"The share price was knocked from record February highs of £21 to less than £15 by Covid-19 chaos. Until the clouds lift, hold."
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