Sunday share tips: Marshalls, Strix

The Sunday Times's Sabah Meddings told readers to 'hold' shares of Marshalls, arguing that the shares were "richly" priced and that the valuation premium versus peers offset the multiple positives around the stock.

A flurry of home improvement activity on the likes of driveways and garden paving boosted sales of the paving slabs manufacturer during lockdown, so that by the end of August they had completely bounced back.

In turn, that meant the firm had been able to return the cash provided by the government for furloughs - paving the way for the reinstallment of dividend payouts.

Marshalls also derived more than two-thirds of revenues from the public sector and commercial sector.

As Meddings pointed out, that meant the company stood to benefit from proposals at the weekend for the state to underwrite 95% of mortgages and plans in the spring budget for spending on new schools, hospitals, roads and rail.

"While it may take a few years for earnings to recover fully, Marshalls appears to have weathered the Covid-19 storm," the tipster added in her 'Inside the City' column.

"However, despite the optimism, Marshalls is richly priced, and trading at a premium to the rest of the building materials sector.

"For now, this is a project to keep on hold."

The Mail on Sunday's Midas column recommended shares of Strix, the manufacturer of kettle safety controls, as a "strong hold for existing shareholders one to watch for potential buyers".

While firms' dash for to conserve cash in the first half had pummeled the company's sales, the pattern was set to reverse in the third quarter, with the firm on track for its best third quarter ever, Midas said.

To take note of, Marshalls sells primarily to manufacturers, but Britons's demand for kettles is as strong as ever given the trend towards working from home.

Strix's controls, which allow kettles to switch off once the water has boiled, are used a billion times each day by nearly 800m people.

The company has also expanded into water filters and other purification tools since listing in 2017.

"Strix shares have made good progress and the yield is a comfort for investors. A strong hold for existing shareholders and one to watch for potential buyers."