Five UK value stockpicks from Artemis’ Derek Stuart

Derek Stuart 200w

Artemis’ fund manager Derek Stuart, who runs the £1bn Artemis UK Special Situations fund, picks five attractive UK stocks that he has his eye on.

ITV- “Earlier this month, ITV came out with a great set of figures, but it also talked about the costs it is taking out of the business. That is my kind of business. I like investing in companies with a high degree of self-help.”

London Stock Exchange- “We have been buying London Stock Exchange, as it could do quite well. We think they are resolving the LCH.Clearnet issue, as we were worried how much they were going to pay for it. This makes it a much more attractive business.” London Stock Exchange’s chief executive said earlier this month that it may not complete its £483m purchase of European clearing house LCH.Clearnet this year as expected.

Smith & Nephew- “This was a new position at the beginning of the year. They do wound care and replacement hips. Long-term demographics makes this business attractive, as people are getting older and more active when they are older. We own it because it is a stable business with a strong niche market position. It is a high margin business and a new management team coming in and taking out cost. The firm will go into next year with an ungeared balance sheet.”

Xchanging- “It is like a Capita. It is a business process, procurement and technology services provider and integrator. There is a new management team in there that are sorting out the business. It was a real basket case before.”

Chemring- “We do not own this defence company because it has had so many profit warnings. It has had such a chequered history. So it is a basket case, but there is a new management team going in and I may buy it. It is interesting because It does quite specialist pyrotechnics and I am pretty sure it has been quite badly managed.”