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3 new additions to our share research – where do they stand?

We’ve added 3 new shares to our share research coverage. Here’s how they stand.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

It’s important investors understand what they’re invested in, and keep up to date with changes in a company. That’s why our team of equity analysts provide research on over 100 UK and international stocks, so you can leave the number crunching to us if you want to.

We recently added some stocks to our coverage list. Here, we’ll take a look at three – where they stand, and the threats and opportunities of the future.

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This article isn’t personal advice. If you’re unsure if an investment is right for you, please seek advice. All investments can go down as well as up in value, and you could get back less than you invest.

Investing in individual companies isn’t right for everyone – it’s higher risk as your investment is dependent on the fate of that company. If a company fails, you risk losing your whole investment. You should make sure you understand the companies you’re investing in, their specific risks, and make sure any shares you own are held as part of a diversified portfolio.


It would be shorter to explain what Alibaba doesn’t do. This Chinese giant has a market cap of $313bn and is responsible for multiple businesses across e-commerce, digital media and entertainment, logistics and cloud computing, to name just a few.

The biggest segment, by some way, is China Commerce, with 903m active users it makes up around 69% of Alibaba’s $134.6bn annual revenue. China Commerce includes Taobao, which is China’s largest shopping website, and TMall, which sells higher-end and branded goods.

Alibaba also houses the impressive AliExpress, which connects global consumers to a vast marketplace, where they can buy directly from manufacturers all over the world. We think this is a strong asset.

There are challenges. Alibaba has said it’s “prudent” not to give financial guidance for the current year, because of the ongoing impact of Covid-19. China has been hit by renewed lockdowns in major cities since spring, meaning supply chain and logistics are challenging.

The worst of the effects for profits are being offset by cost cutting efforts. This is admirable, but not a permanent solution. Volumes will have to pick up the slack eventually.

And keeping sales on an upwards trajectory well into the future is the responsibility of international markets.

Alibaba’s domestic operations are facing a slowdown, relating to a weaker economic outlook, a government tech-crackdown and increased competition. The group’s responded by doubling down efforts to expand in South Asia. We think this is a meaningful growth opportunity.

We’d be remiss not to mention the Cloud business too. This is raking in about $11.8bn in revenue a year. But ongoing investment means only a small drop of this is making its way to profit.

We think this is a great industry to be in, but we’re mindful that Alibaba’s cloud business lags some of the big global competitors. The regulatory environment has been described as an “onslaught”, making rapid tech growth more difficult. We currently see Amazon and Microsoft’s Cloud businesses as more compelling.

A shining positive is Alibaba’s net cash hoard of $63bn. This gives it enormous flexibility in tough times, as well as the ability to throw money at expansion efforts.

Alibaba’s scale and usership base is formidable. We think it has the foundations to do well. However, there are some very real headwinds blowing.

If international expansion efforts take off at the required speed, Alibaba could unlock enormous growth, but that’s a very big ‘if’. Concerns are reflected in a price to earnings ratio of around 15, which could be compelling – only for those prepared to take on some increased external risk.




This bakery giant is a far cry from the mildly bleak sausage roll stop of years gone by.

Greggs now has over 2,000 shops – including a renewed push into London. The five-year plan hopes to bring the total number to 3,000. Within the strategic pivot, Greggs is also refitting its shops and changing the menu.

The group has successfully repositioned its brand into a slightly more premium bracket, feeding into like-for-like (LFL) sales growth of 44.2% last year – although that’s against a very low base when lockdowns badly dented trading. Compared to pre-pandemic levels, LFLs were up 3.7%.

Greggs is also increasing the number of shops that are franchises from 17% to 20%. We’re supportive of this model. Greggs isn’t on the hook for day-to-day costs and conundrums at these locations when compared to the company-owned sites.

Greggs is also increasing its presence at travel locations (think petrol and service stations, as well as train stations). Relying on high-street shoppers and commuter traffic isn’t a sustainable plan. So, we think a doubling down of effort on travel and convenience locations is the right move.

There are other growth levers too, including bolstering delivery services (it currently has a partnership with Just Eat), and opening later to attract more evening customers. The latter is something we’d like a bit more detail on, as we’re dubious about how successfully the Greggs brand can attract dinner guests. But with a menu refresh on the way, we’ll reserve judgement for now.

Greggs is facing the same cost inflation pressures as others in the industry. The new premium brand means some of this can be passed onto customers. However, the extent to which it can do this without hurting volumes is lower than higher-end, or even supermarket rivals, in our opinion.

A net cash position of almost £200m means Greggs can stomach some disruption, but inflation could dent profitability in the medium term.

The net cash position also helps underpin the dividend yield of 3.5%, and allowed the group to shell out a generous special dividend last year. A return of special dividends shouldn’t be assumed, especially because on an underlying earnings basis, Greggs stretched itself quite thin to pay it. Instead, the group’s hinted it’s returning to a meatier ordinary dividend policy – but as ever, no dividend is ever guaranteed.

There’s a lot to like about Greggs – literally and corporately. The valuation has come down some way since the heady days of the vegan sausage roll campaign too. While we admire Greggs’ strength, there are some inflation-linked headwinds to be expected in the medium term.




TUI has been catching headlines for the wrong reasons lately – it was caught up in the cancellation chaos plaguing UK airports. Frankly, this is exactly the kind of situation it doesn’t need. For all the airlines, right now should be about rebuilding resilience after the pandemic, not fighting further fires. Like most of its peers, TUI really struggled in the pandemic so there’s plenty of work to be done.

But zooming out from the current chaos, things are looking much brighter. And, as always, it’s the wider investment case, not snatchy headlines, that shareholders should focus on.

Second quarter revenue has mushroomed from €200m to €2.1bn, as demand ramps back up. The group also operated 71% of pre-pandemic capacity in the same period, so things are on the up.

There are a couple of things to keep in mind though. TUI doesn’t just run flights, it has a much wider package holiday business. In some ways that’s what makes TUI more defensive – it has more to offer and plenty of cross selling opportunities. But getting capacity back up to full whack is also a much higher priority, the drains on cash when you have planes and huge hotels to fill are enormous.

TUI has said Hotels & Resorts delivered a third consecutive quarter of positive underlying operating profit since the start of the pandemic. Occupancies and average rates are expected to “develop strongly through the second half”. This all sounds great, but we need proof of a solid summer trading period. The ongoing spate of cancellations from peers means we can’t rule out a total return to normal being pushed further into the future.

TUI has also raised around 10% of the group’s share capital, or around €425m, by placing new shares, as it looks to reduce debt and government funding. Again, we think this is a step in the right direction. But there’s still liquidity risk which won’t be extinguished until operations are back up and running at full speed.

TUI faces challenges, especially as the cost-of-living crisis bites and people rein in spending. There’s the potential for TUI to do well in the future thanks to its more diverse offering, but we think further turbulence is likely for now.



Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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