The Motley Fool

I think these Nick Train-backed stocks will rally back to form in 2021 and beyond

Image source: Getty Images.

Star fund manager Nick Train has consistently beaten the market over many years. That’s why I think it’s always worth keeping an eye on the UK stocks in his portfolios. Two of these — consumer products company PZ Cussons (LSE: PZC) and fizzy drinks firm AG Barr (LSE: BAG) — reported to the market today.

Turnaround potential

Nick Train first purchased shares in Imperial Leather owner PZ Cussons (LSE: PZC) towards the end of 2019. The company’s valuation has climbed roughly 20% since. This morning’s interim results may not have added to the momentum but I do think they’re encouraging considering the troubles PZ has encountered in recent years. These include a challenging economic backdrop in Nigeria (a key growth market) and consumer uncertainty in Europe. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

As a result of the huge demand for hand wash and sanitiser, overall revenue rose 14.6% to just under £313m in the six months to the end of November. Reported pre-tax profit came in at £36.3m — 1.6% lower than over the same trading period in 2019 due to some one-off costs. 

For me, however, one of the big highlights of today’s statement was the reduction in net debt to £18.2m. Back in 2019, it stood at £137.7m. A further positive was the interim dividend being maintained. Yes, a gently rising dividend is preferable. However, I don’t think investors will be too disgruntled by the 2.67p per share cash return. Let’s not forget that many, far larger companies have had to halt their dividend payments entirely.

PZ is not a share for the impatient. In addition to uncertain trading conditions and higher costs, the new management team is also attempting to turn around key brands and simplify operations. This is a multi-year job and goes some way to explaining why the company remains a contrarian pick.

As a committed buy-and-hold investor, however, this is probably what attracted Nick Train. It also chimes with my own Foolish approach to investing, namely holding quality stocks for the long term. I don’t own a slice of PZ Cussons just yet, but today’s news does suggest to me that the worst could be over for those already invested. 

Ready to fizz?

Another one of Nick Train’s favourite UK shares (and mine) is IRN-BRU producer AG Barr (LSE: BAG).

Today, Barr said that revenue for the last financial year would now be somewhere in the region of £227m. That’s less than the £255.7m achieved in FY19/20. Nevertheless, it’s still “marginally ahead” of what the company had expected. Positively, the beverage-maker also thinks pre-tax profit will be higher than analysts had been predicting. 

So, why aren’t the shares rallying?“, you might ask. Similar to PZ Cussons, at least some of this must be down to Barr’s foggy earnings outlook now that we’re back in lockdown. Talk of restrictions lasting until the summer could also be keeping a lid on investors’ enthusiasm for the stock. 

Not that I — or probably Nick Train — am concerned. Barr has £50m in net cash on the balance sheet. This should be enough to see it through to the other side. 

At 21 times forecast FY22 earnings, the shares aren’t cheap. Then again, this could turn out to be a reasonable price to pay later in 2021. Once the hospitality sector reopens, I think AG Barr could get its fizz back. 

One stock for a post-Covid world...

Covid-19 is ripping the investment world in two…

Some companies have seen exploding cash-flows, soaring valuations and record results…

…Others are scrimping and suffering.

Entire industries look to be going extinct.

Such world-changing events may only happen once in a lifetime.

And it seems there’s no middle ground.

Financially, you’ll want to learn how to get positioned on the winning side.

That’s why our expert analysts have put together this special report.

If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains...

Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge!

Paul Summers owns shares in AG Barr. The Motley Fool UK has recommended AG Barr and PZ Cussons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.