3 Financial Stock Picks

VIDEO: Jupiter's Guy de Blonay looks at three opportunities in the financial sector, including a bank, a payments firm and the London Stock Exchange

Holly Black 11 June, 2020 | 12:16AM
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Holly Black: Welcome to Morningstar. I'm Holly Black. With me is Guy de Blonay. He is Manager of the Jupiter Financial Opportunities Fund. Hello.

Guy de Blonay: Good morning, Holly.

Black: So, you've got three stock picks for us today. Unsurprisingly, you're focused on financials. Where would you like to start?

Blonay: The three stocks I'm suggesting to talk about are quite different from each other. One is a bank, a straightforward bank, but a high-quality bank where management have been very conservative in the past, so it's not now stuck with some unfortunate situation where they've been reckless, for example, underwriting too many or too much credit or perhaps simply lending it to the wrong people. And these companies are – or these banks, these typical banks are rare; they are difficult to find. The one that I'm talking about today is a regional bank in Switzerland called Banque Cantonale Vaudoise that is a component of the fund, a major component, in the top 5 I think. But I think the main idea here is that this is a company that has been able to surprise on the quality of credits, its above-average level of capital and again, its consistency, very strong track record from management in delivering on their targets.

Black: Okay. What's stock number two?

Blonay: Number two is an exchange, the London Stock Exchange. I think the interesting story within the London Stock Exchange is not only the fact that they are a gateway for capital raising and trading, it's also now embracing the world of data analytics offering data services allowing companies to understand their clients better by understanding the sets of data that are now being analysed for a fee on companies. Global exchanges are also companies that do well during periods of high volatility. When volatility makes or comes on the back of an uncertain future like certainly the type of environment that we have now with the pandemic Covid-19 has created, we don't know where we're going to be in about six months' time. But still, some uncertainty out there benefiting exchanges as people look for solutions to protect themselves in volatile stock markets and bond markets.

Black: Okay. What's our final stock pick?

Blonay: The final stock pick is Adyen. Adyen is an e-commerce play really. It's a payment solution that is exploiting the rise in e-commerce. It is interesting simply because it is allowing the cashless society progress at a certain speed. I would argue that Covid-19 is simply accelerating this progress. And offering the best product in the market today is certainly going to enable the company to gain market share and to really benefit from this cashless society migration. And simply put, it might look a bit expensive when you look at its valuation, but we've bought it since IPO which was about two years' ago and we still believe that the growth prospects for payment solutions, online payment solutions, with the rise and the importance of ecommerce in the future, this is a company that is well placed to benefit from this trend.

Black: Guy, thank you so much for your time. For Morningstar, I'm Holly Black.


The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Holly Black  is Senior Editor, Morningstar.co.uk


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