Sunday share tips: Impact Healthcare, Wickes
Impact Healthcare Reit
The Financial Mail on Sunday's Midas column recommended shares of Impact Healthcare, as 'a long-term buy', touting the company's long-term growth prospects, dividend yield of over 5.0% and management's attention to detail which they surmised was paying off.
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Impact owned 129 homes catering to more than 5,000 elderly residents who were cared for by the specialist care companies letting the homes.
Yet by 2030 the number of Britons aged over 85 was expected to jump by half to around 3.0m and, of those, about 15% would need to be looked after, preferably in residential or nursing homes.
Tenants were also meticulously vetted for their professionalism.
So too, homes were acquired with a view to a host of factors, including local demand and nearby availability of staff.
Management was also growing its roster of tenants slowly, curating it in order to ensure the quality of their finances.
Furthermore, two-thirds of residents were funded by NHS and local authorities, so that the majority of rents were government-backed.
Even so, Cowley and Patel also made sure that rents were affordable; hence their 100% rent collection rate even throughout the pandemic.
Not least, that had allowed the company to pay out "attractive" and rising dividends since Impact was listed on the market 2017.
In terms of the outlook, "strong" demand was expected with the company striving to improve its homes and having moved into development, meaning funding homes that have already been pre-let to tenants.
"Few people want to put their loved ones in a care home or end up in one themselves.
"Cowley and Patel are acutely aware of this and strive to make Impact's homes as warm and welcoming as possible.
"[...] The approach has worked well so far and should continue to do so."
The Sunday Times's Lucy Tobin highlighted the strengths of home improvement retailer Wickes over its much larger rival Kingfisher.
Foremost was the DIY chain's longstanding focus on value, which should stand it in good stead in the current cost and price environment.
Wickes had also invested heavily in its digital footprint and its core customers were older and wealthier and therefore better able to weather the current financial storm.
Hence why Sam Cullen at Peel Hunt said that it was "one of the most mispriced companies we cover" given that its shares were trading at roughly just six times expected earnings for 2022, which he said was "simply too cheap".
Kingfisher's boom on the back of Covid on the other hand had fizzled out, it was facing soaring costs, profits were expected to decline in 2022 and was trying to rightsize its 40 "vast" stores over the coming decade.
All told, that prompted to tell readers: "Something to do on your phone while queuing to buy paint this week: sell Kingfisher, buy Wickes."