Welcome to Morningstar's 3 Stock Picks. I'm Holly Black. With me is Ben Peters, he is Manager of the
Evenlode Global Income Fund. Hello. Hi, Holly.
So, you've got three stocks for us today from the portfolio, where should we start?
Well, let's kick-off with one of our larger positions in the portfolio,
which is Henkel (HEN) which is a German industrial and consumer goods conglomerate, it has slightly
odd mixture of businesses, but each has its merits in its own way. So, the largest part
of the business is actually a business, which makes industrial adhesives. So, this is not
sort of box standard glue, this is very high-tech adhesives that get very designed into applications
such as in smartphones, in buildings, in aircraft, in cars that sort of thing. So,
very high-tech solutions that their customers will want things like energy efficiency,
they'll want obviously robustness of the connection, and so on. So, it's very good
business, gets very tied into its customers. And that makes up about third of the business.
It was impacted somewhat by the industrial slowdown during the pandemic, but that's very much
been bouncing back in sort of latter quarters more recently. So, that's encouraging to see.
So, Ben, an adhesives business, it's not the sexiest thing in the world.
What do you particularly like about this company? Well, what I like about it is the fact that these,
these products require a lot of innovation, and a lot of what the company does is work with its
customers to figure out what their requirements are, what the challenges are. So, for example,
in electric cars, which is clearly a growth area over the coming 10 to 20 years sealing the battery
compartment is very important. If a battery gets set on fire for some reason like in the event of
a crash, and that's a very big problem for an electric car. And so, the robustness of that
is something that Henkel with their technical expertise in the world of adhesives can help with.
Being set on fire tends to be an issue. Okay, what is stock number two?
The second stock I'd like to talk about is the U.S. publisher, John Wiley (JW.A). So, Wiley
is – biggest part of its business is academics – academic publishing and journals business,
it's very big with society and academic societies. And it has over 1,600 titles
and about 8 million articles published. And what do we like about this business?
Very interestingly, the other parts of the business which has just reached profitability,
and is probably the growth engine for the business in the future, is putting
together online programs for higher education institutions, and then managing for them. So,
in this country, there is the University of Birmingham and the University of Bath are used
by – use Wiley to deliver their online programs, and that seems a good growth.
Okay, what's our final stock? And so, the final company I'd like to
talk about is Medtronic (MDT). Again, it's a U.S. business, but it's the world's largest medical
devices company. It has got an amazing breadth of devices that it makes from stents to insulin pumps
and spinal implants and sort of everything you can imagine in between. It's clearly got benefits for
the end customer, if you have some ailment that you need treating, then it's highly likely that,
you know – if you need a device, then it's going to be a Medtronic device, it's got (72 million)
patients there that addresses annually. So, clearly, you know, innovation within
that world is very important, and also relationships with healthcare professionals,
to help them understand the benefits of using Medtronic products
And have companies like that suffered at all within the COVID pandemic when maybe people have
not been thinking about other conditions? Yeah, it's a very good question. And yes,
certainly in the early stages of the pandemic, when healthcare systems were very much focused
on the pandemic and its effects, elective surgery, so sort of optional surgery if you like, did fall.
And that did have an impact on companies like Medtronic. That is coming back now. I
think elective surgeries are now back to sort of pre-pandemic levels. And clearly if you needed
surgery, before the pandemic, you're unlikely to not need it sort of just because there has been a
coronavirus pandemic on so, so there is an element of sort of catch-up with some of these things.
Superb. Ben, thank you so much for your time. For Morningstar, I'm Holly Black.