Owning tax-friendly stocks is more important than ever – and this healthcare company ticks all the boxes
Since we first tipped the stock in March 2017 it has gained 71pc; it has risen by 20pc since its addition to our IHT portfolio in January 2018. It now trades at around 25 times forecast earnings.
While this is high relative to many stocks in the current market downturn, Craneware’s solid financial position, clear competitive advantage and long-term growth prospects mean it has further return potential. Hold.
Questor says: hold
Share price at close: £21.10
Update: Brooks Macdonald
This wealth management company, part of our IHT portfolio since August 2018, is another fundamentally sound business. Since then the shares have slipped by a modest 4pc but it has paid 14pc of our purchase price in dividends.
It has raised its divi every year since 2005 despite the numerous bear markets and corrections along the way. The current bear market has, unsurprisingly, led to a sharp fall in the shares, which have lost 30pc so far this year.
If the market falls further, Brooks is likely to fare even worse because of the link between its funds under management – and hence its income – and asset prices.
In its latest quarterly update it said funds under management had fallen by 0.9pc against a backdrop of volatile markets. However, investors had still entrusted £200m of new money to the company. This amounts to around 1.3pc of funds under management and shows that its underlying performance has been relatively positive.
The company continues to have an upbeat long-term outlook. The proportion of people aged over 65 is growing and we are increasingly forced to organise our own pensions instead of relying on defined benefit schemes.
And, while short-term share price volatility is likely to be high thanks to ongoing economic uncertainty, the company’s status as a “leveraged” play on the stock market means it is likely to generate high returns in the next bull run.
At 15 times forecast earnings, Brooks remains relatively inexpensive. Its solid fundamentals, sound income prospects and recovery potential earn it a continued place in our IHT portfolio.
Questor says: hold
Share price at close: £19.20
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.
Read Questor’s rules of investment before you follow our tips.