Part of your Psyche = Part of your Portfolio?

Tesco is so established in this country that it’s a part of the British psyche, and on that basis alone, you could argue that the leading supermarket chain, should have a place in your portfolio.

Of course, familiarity isn’t a justification for an investment on its own, but there is plenty to like about the stock right now that does justify it.

Tesco has sales of £66.60 bln per annum, an operating profit of £3.152 bln, and free cash flow of £1.957 bln (2025 numbers). Those financials are driven by a 28.50% share in the UK grocery market. The company employs 330,000 staff and operates just over 5000 stores, the vast majority of which are in the UK.

Despite tough economic conditions and a government that could hardly be called business-friendly, the grocer is enjoying something of a renaissance and is reminding us why it's the top dog among retailers and what it does so well.

Tesco recently reported its 2026/27 interim results, which showed that sales excluding fuel were up by +1.60% and operating profits by +6.0%. Free cash flow rose by +21.0% and EPS by +12.20%, all of which allowed the company to declare an interim dividend of 5.05p, itself up +5.20% over the comparable period last year. 

The free cash flow and profit that Tesco generates also allow the company to buy back its own stock, and it's currently more than halfway through a £750.00 million share buyback, which is due to be completed by April 2027.

Tesco also reported that its consumer satisfaction was at an all-time high, an intangible metric that says a lot in the increasingly competitive UK grocery market.

The firm took the opportunity to reiterate its 5-point strategy for success, which is comprised of :

Winning in food.

Meeting more customers' everyday needs.

Being the most strategic partner for its suppliers.

To be connected, personalised, and loved by customers.

All of which should be underpinned by long-term business sustainability. 

Writing after the earnings release, Deutsche Bank said of the stock:

 “We continue to view Tesco as a best-in-class operator in UK grocery. We are particularly encouraged by the resilience of earnings, despite subdued UK LFLs. Profit growth is increasingly supported by a combination of favourable sales mix (e.g. Finest +8.9%), cost savings and ancillary income streams such as high-margin retail media. Importantly, this is not coming at the expense of competitiveness, with customer satisfaction at a record high.”

Tesco is also seen as a buy by the broader market, with 7 buy, 3 neutral and 1 sell recommendation among the 10 analysts covering the name. 

To summarise, Tesco is the ultimate UK defensive play, brilliantly managed and extremely efficient in its day-to-day operations across logistics and retail.

Performance 

Tesco stock is up +13.99% year to date, comfortably outperforming the FTSE 100 over that period. 

Over 5 years, the stock has risen by +88.0%, and over the last decade by +139.0%. 

One performance metric that caught my eye is the fact that Tesco stock has posted 53 new highs over the last two years, roughly one every fortnight. This suggests that price momentum and appreciation have been pretty consistent, which the chart bears out. 

520.6p is the stock's 20-year high price, and as such, it's a target to aim for. I am not expecting Tesco to blast through that level immediately, but if it can build a base at and around that price, it could be a platform for future price appreciation. Deutsche Bank’s price target is 550p, for instance. 

Overall Rating 4.0/5.0

Pros: A highly efficient, well-regarded business with a near 30.0% market share. 

It operates in Eastern Europe and the Republic of Ireland; it also has an insurance business with 2.0 million customers.

Cons: Tesco is a classic low-margin, high-volume business, which is sensitive to price pressures and inflation, that can erode its relatively fine margins. Other grocers are constantly gunning for Tesco’s customers and market share. Opportunities for significant growth at Tesco in the UK are limited. 

The October 28th budget could raise business taxes further and apply additional pressures to large employers and consumer-facing businesses.

Technical overview 

The Tesco share price has been in an uptrend for almost 4 years, having posted a low in October 2022. The 50-day MA line has supported that uptrend for the majority of those 4 years and has only been breached infrequently and briefly in that time. RSI 14 is currently around 68.64, not too far from the overbought boundary at 70 but not yet through it.

To be frank, in recent times a rising RSI 14 has been associated with Tesco price gains, so that may not be something to worry about. In recent weeks, both the 10- and 20-day MA lines have crossed up through their 50-day counterparts. The 10 Day line has also crossed above the 20-day, and both lines are trending upward right now.

Rating:4.0/5.0

Fundamental Overview 

Tesco trades on a forward PE of 16.30 times earnings, which is above Sainsbury's 14.29 times and Marks & Spencer's 14.71 times. If you buy Tesco at these levels, you are paying a premium to own what we can think of as the category killer in the sector. 

However, I have written before about the opportunities that AI could provide to large-scale retail operations in the US. There is no reason to think Tesco couldn't benefit from AI in areas such as logistics and planning, and in hyper-personalising ads and offers for its customer base. These improvements should ultimately flow through to the bottom line.

Rating: 4.0/5.0

It's been an interesting time for London's listed retail brokers; much of the focus has been on the margin trading sector, and not in a good way for some.

Is the US a graveyard for IG Group?

Cast your mind back to late July and the news that IG Group was making its second billion-dollar acquisition in just over 5 years; this time round, the target was Underdog, a sports prediction and Fantasy sports brand from Brooklyn, New York. 

The market did not take kindly to the news of the deal, and IG stock, which trades under the ticker IGG LN, lost 23.00% of its value in the days following the announcement, which was bad enough.

However, there was worse to come from a shareholder perspective. 

Because IG issued what amounted to a profit warning on October 2nd, saying that OTC revenue retention had fallen from 80.0% to 70.0%, that dip was caused by a combination of lower volatility and a new internal hedging policy. This kept more customer trading volumes in-house. 

The net result was that IG reduced its forecast for Q3 2026 total revenue by -14.0%.

One interpretation was that IG had shot itself in the foot; the market voted with its feet, and IG shares fell by another -20.0%, trading down to 923p, having touched a high of 1956p on June 15th.

IG stock has lost -48.36% of its value in the last 3 months, according to data from Barchart.com.

Analysts have largely been radio silent on IG since the warning. 

Peel Hunt reiterated its hold recommendation and £11.00 price target vs the current price of £ 12.37, and the stock retains a strong buy consensus among the analysts that follow IG Group. 

However, you have to feel that could easily change given recent events.

The company will meet with analysts and major shareholders on the 8th of October to walk them through the Underdog deal; it will also outline its strategy (going forward) at a separate meeting on October 22nd. 

Two briefings that could literally determine the future of the company. 

Against this background, it seems appropriate to look at IG's rivals and try to determine what their prospects are.

Plus500 PLUS LN 

The company took the unprecedented step of issuing its own trading statement in the wake of IG's news and a sympathetic dip in its own share price.

 Plus 500 confirmed that it was trading in line with expectations and stressed that it has a strong cash position and that it would issue a full Q3 trading statement as planned on October 20th. 

It last reported on August 10th with its H1 2026 results, which showed a 5-year high customer income and revenues at 3-year highs.

Plus 500 also announced at that time a further $182.50 million in shareholder returns, taking the total shareholder returns since IPO to an impressive $3.10 billion. 

The summer months witnessed lower volatility, and equity markets lacked clear direction, but there was increased volatility in gold and energy, which could well have compensated for that.

Plus500’s stock price has fallen by just under -12.50%over the last month and by -35.30% in the last quarter, moves that suggest momentum in the stock is fading rapidly.

UK stockbroker Panmure Liberum wrote on the stock after the unscheduled trading update, reiterating its buy recommendation and £54.00 price target, which compares to the current share price of £32.42.

The stock remains a strong buy among the 5 brokers who cover the name. 

The market will be looking for confirmation that Plus500 is indeed trading in line and also to see how the firm's US operations are faring. Plus500 has a retail futures business in the States, a sports and events prediction division, alongside a B2B institutional futures infrastructure and operations business.

CMC Markets CMCX LN 

CMC didn't escape unscathed by the fallout from IG's profit warning; its shares lost -5.50% over a couple of days in early October, part of a bigger markdown which saw them lose -15.40% over the last month, though year-to-date they are up by +122.0%. 

Founder, CEO and major shareholder Lord Peter Crudas has bought £1.0 million of the firm's shares in recent days; he already owns some 60.00% of the business, which has a market cap of £ 1.80 billion.

The stock attempted to rally on Monday, 5th of October, trading up by 6.65%, but there was no real follow-through thereafter. 

CMCX is buy-rated among the analysts that follow the stock. 

RBC reiterated its buy recommendation and 760p price target in mid-August; the stock is trading at 658p as I type. The company is due to report on November 26th. 

It recently announced the launch of CMC Funded, a specialist prop trading business, which it hopes will nurture what it calls trading talent. The business will draw on CMC's technology and trading insight. 

As well as wanting to know how the markets business has traded, investors will be keen to hear about developments at CMC Connect and CMC CAPX, which are both B2B businesses within the group. 

In the past, CMC has struggled to contain its cost base, but it should now start to see economies of scale as Aussie bank Westpac migrates 450,000 retail customers and AUD 39.0 billion of assets onto the CMC platform.

CMC continues to diversify both vertically and horizontally with the trading and markets universe, which should differentiate it from its rivals over time.

AJ Bell AJB LN 

AJ Bell is now the largest listed UK D2C investment platform. It will publish a year-end trading update on October 22nd and report its full-year results on December 3rd. 

Its previous trading update was out in early July; among the highlights then were solid customer growth of 39000 in the prior quarter that took total customer numbers to 762,000, an uplift of +5.0% in the quarter and an impressive +23.0% growth on a year-over-year basis. 

Assets under administration also grew strongly YoY by +26.0%, and net inflows were higher by +46.0% in that period.

Deutsche Bank wrote on the stock in September, saying that: “The group continued to report strong D2C customer growth driven by “marketing momentum,” which included a brand refresh, and that the lifetime value of the firm's customers continued to be in excess of the cost of acquisition. 

I would suggest this is the most important KPI in a high-volume financial services business.

Given that positive ROI, or return on investment, Deutsche believed that AJ Bell was likely to increase spending on marketing for 2027, though not at the expense of the firm's internal target of a 40.0% PBT or Profit Before Tax margin.

If AJ Bell can continue to attract new customers and retain healthy pre-tax margins, they could easily justify the bank's 700p price target, vs the current 575p price 

Of course, AJB don't have the field to themselves; Hargreaves Lansdown may be under private equity ownership these days, but it's still active. Aberdeen-owned Interactive Investors is also a threat, and it remains to be seen how Evelyn Group, now part of NatWest, will be able to leverage its access to two private banks and millions of current account customers. 

A|J Bell trades at a forward PE of 17.27 times according to Barchart and has impressive return on equity and return on investment ratios of 59.90% and 43.10%, respectively. 

The share price is up by +124.0% over three years and by +30.00% year-to-date. Earnings growth has been steady rather than spectacular, with revenues and earnings growing by just over +20.0% each over the last five years.

However, if they have found a marketing sweet spot, then those numbers should soon start to tick up. 

Filtronic shooting for the stars

I am staying in the AIM market this week and looking at another very interesting business that is bang on trend; that company is Filtronic FTC LN.

Filtronic is an expert in specialist communications equipment, used in wireless backhaul and satellite communications, aerospace, defence, quantum computing and other demanding applications.

To underline its credentials, the company recently announced it had won a $61.80 million follow-on order from SpaceX, supplementing the original $62.50 million order it won in 2025. 

The new order is for the firm's Cerus E-band gallium-nitride (GaN) solid-state power amplifiers (SSPAs), which boost the power of millimetre-wave signals in satellite/high-capacity comms systems. 

Gallium arsenide offers higher power output, better electrical efficiency, and improved thermal performance than other materials, but these characteristics come at a higher cost; hence the size of the SpaceX orders.

This is exactly the kind of high-quality, value-added manufacturing that’s so beloved by UK politicians but which, in recent times, has become something of a rarity. 

Filtronic employs 236 people; headcount is up by +27.0% over 2025. It has offices in Sedgefield, County Durham, Cambridge, and Maryland, USA. 

Revenue has grown from £25.40 million in 2024 to £55.50 million in 2026 and is estimated to reach £60.00 million in 2027 and £75.0 million in 2028. 

UK Broker Cavendish has a buy rating and a price target of 290p, though that's well below the 335p average price among analysts who cover the stock. German bank Berenberg is targeting 360p. 

Filtronic isn’t just winning orders from SpaceX; last month, it announced an $8.0 million contract win from an unnamed US company, also a follow-on order from a business in the space industry.

Filtronic's equipment also has applications in quantum computing and quantum networking technologies, which at the moment are mainly based in laboratories, but which will surely spin out into the real world within the next decade, providing Filtronic with further growth opportunities. 

Growth, however, has meant added expense for Filtronic, which has meant lower profits as the firm invested in new facilities and engineering capabilities. That meant that cash flow dipped into negative territory, but that's likely to be a short-term blip. 

In 2025, the firm generated £13.80 million in operating cash flow, and it currently has some £12.90 million in cash and cash equivalents on its balance sheet.

Filtronic is best viewed as a small engineer in a niche space, supplying mega-cap technology companies.

Having SpaceX as a repeat customer is a massive vote of confidence in the business; however, it is one that places pressure on management to execute well by turning those and other contracts into sustained high-margin growth. 

One could also make the case that, at a sub £600.0 million market cap and in a high-tech niche, Filtronic could easily be an acquisition target itself.

Performance 

Recent share price performance hasn't been that great, with the stock moving sideways in a band between 195p and 270p since mid-July. 

The good news is that Filtronic is testing above the upper levels of that band, and is printing at 275p as I type. If that can be sustained, then 290p and 300p look plausible upside levels to aim for.

Trading volumes are bigger than you might imagine, and we saw more than 5.0 million shares change hands in the first two days of October. Over the last month, the stock has rallied by +26.80%.

You get a flavour of the growth that the stock has been capable of in the past when you look at the 3- and 5-year performance numbers, which are +1627.0% and +2390.0%, respectively. 

Overall rating: 3.5/5.0

Pros: Enjoys a niche position in the supply chain of a rapidly growing market. 

Is winning high-value repeat contracts from the space industry. The firm's valuation and specialist engineering talents make it a potential bid target.

Cons: It's often difficult for small companies to meet the exacting standards of multinational/mega cap customers, and far too easy for them to become focused and reliant on those customers.

Scaling Filtronic might be beyond the capabilities of its current balance sheet and management team and could require further investment and reduced profitability/cash flow.

Technical overview 

Filtronic stock has recently been through a period of consolidation; however, it is now testing higher, and that's reflected in the MA crossover in the chart with the faster-moving 10-day moving average crossing up through the slower-moving 50-day line, albeit with a fairly shallow trajectory. We might see that steepen if the price establishes itself above 270 /75, from where we could look for a retest of 280p and the three-month high at 290p. 

Looking at the stats for Filtronic, the fact that it has posted 28 new year-to-date highs suggests that the move higher is possible. Though it may take an additional catalyst/news to get things moving 

Rating: 3.50/5.0

Fundamental Overview 

The fundamentals for Filtronic don't look that good at first glance, because it's going through a transition that involves investment and expansion, with lower profits brought about by higher R&D spend, a larger engineering team and increased business development costs. 

Space dominates the firm's revenue, accounting for £42.10 million of the £55.50 million generated this year. Concentration, yes, but spending on satellite comms is expected to reach $40.50 billion by 2030, so it's right for Filtronic to prioritise this channel, not least because the new investments will allow the firm to grow revenues to as much as £200.0 million.

Management estimates that each new production line, which costs £750,000 to install, will allow an additional £15.00 million of turnover, potentially offering a very lucrative return on investment. 

Three words sum up what's needed at Filtronic: execution, execution, execution. 

Rating: 3.50/5.0

Boku Opportunities 

Stocks come in and out of fashion- one minute they can be all over the media, and the next the trail goes cold. That's probably down to their PR and how much runway the narratives behind the stock have. After all, stories have shelf life, and there is always plenty of competition to be the next big thing.

Aim listed payments platform Boku Inc BOKU LN has had its moment in the sun, and in my stream at least, names like Poolbeg and Rent Guarantor are hogging the column inches. 

However, Boku being out of the spotlight might work to our advantage.

Boku is a payments platform with a difference, in that it facilitates local payment methods for merchants and online vendors. Those local payment methods include direct carrier billing (DCB), where users pay for services and products via their mobile devices and bills. Digital wallets and account-to-account payments, among others.

Blue-chip customers 

This is a specialist niche within the $27.0 trillion global payments sector. Boku is a minnow amongst giants in the payments space but it still processes payments worth some $17.0 billion per annum. 

Its customer base is global, but APAC and EMEA are the regions where the bulk of its revenues are generated.

Boku’s customers include Netflix, Meta, Spotify, Sony, Microsoft and others. Boku services allow what we can think of as marginal /additional consumers in the emerging economies to pay for services from these types of companies. 

Boku acts as a bridge between local conventions and payment systems, and the service providers, allowing the likes of Netflix to expand its customer base without having to build a unique payments architecture from scratch.

Boku reported H1 2026 earnings last week. It posted revenue of $66.0 million, up as much as +11.0% on the prior period. And Total Payments Volume (TPV) of $8.90 billion, a jump of +16.0% over the same period in the year before.

Importantly, the group finished the first half of 2026 with $84.0 million of cash and no debt. That despite spending $23.0 million on share buybacks in H1.

Boku facilitates more than 200 local payment methods in 60-plus countries, which contain billions of consumer payment accounts. Boku has 300 merchants on its platform, though the top two account for around half of its total revenues. 

Boku does not disclose the identity of these two vendors, though an educated guess suggests they're Apple and Google. 

Deutsche Bank was impressed enough by those earnings to raise its price target on the stock to 180p, up from 155p, putting plenty of daylight between that and the 133p stock price. Rival brokerage Peel Hunt also views Boku as a buy, and they are targeting 173p.

Boku is rebounding from a profits warning in July, when it cut full-year guidance and identified several commercial headwinds; the stock price fell by around 33.0% thereafter. 

That reset puts the stock on a forward PE of around 25 times earnings, high but not excessive. 

However, I think we should put any ideas of world domination to one side, and instead see Boku as a niche facilitator with a blue-chip client roster.

Its market cap is just £378.50 million, which would make it a bite-sized acquisition for a payments industry peer, or a telecoms group, looking to establish a foothold in DCB and local payments. 

Performance 

There are no two ways about it: the share price performance of Boku has been disappointing for long-term holders who have lost roughly a third of their money over the last 5 years. 

However, in the shorter term, things are looking up, with the stock up almost +15.0% in the last month, during which time the price has posted 12 new highs, and there have been several significant days of high-volume trading over the last week.

 For example, we saw 3.78 million shares change hands on 25/09/26; that's three times the daily average turnover in the name.

What's needed now is stability and a demonstration that the firm is working through its issues and acting on its plans to deepen its merchant partnerships, diversify its revenue streams, improve scalability and future-proof its platform and technology.

And it's here that the biggest opportunity may lie in the shape of agentic commerce; AI-driven purchasing is still in its infancy, but it does exist, with the introduction of AI assistants such as Meta’s Muse. Agentic AI/Commerce is likely to grow quickly, and yes, Meta platforms are a Boku client.

Overall Rating 3.50/5.0

Pros: Niche provider within the payments space with a blue-chip client list. Its low margin but high volume business is cash generative and the firm has no debt. Boku has a moat made up of deep and long-standing relationships with telcos and mobile networks across multiple jurisdictions, plus the licences and banking relationships that facilitate cross-border payments. 

Cons: Reliance on two major customers for approximately 50.0% of its revenue - big tech can and has changed horses in the middle of the race before. Margins appear to be under pressure in the intensely competitive payments space. Compliance and regulation are a significant issue for a small-cap operating in so many different jurisdictions.

Technical outlook 

Boku found a bottom around 90p post the profits warning, and since the 21st of July the 10-day MA line has provided support to the share price. More recently, the price has run into resistance circa 136p. Just below the top of the gap left behind by the warning at 138p. Breaking the resistance, filling the gap and moving higher is what’s required from the price action if we are to take a bullish stance on the stock.

If we were to indulge in some fantasy M&A, then a take-out price of 200p, a 50.00% premium to current levels, would be the least we could expect, imho.

Rating 3.50/5.0

Fundamental outlook

Cash-generative, debt-free, and still growing its business, which counts several of the biggest companies on the planet as clients, is not a bad description to have. 

The company is buying its own stock, spending $23.0 million on this in the first half of 2026. 

If Boku can leverage its existing relationships by facilitating payments within agentic commerce, then that could change the basis for the business and put the stock in the shop window. 

My honest opinion is that it's too small to remain independent indefinitely; a trade sale seems the most likely outcome, assuming that advancing technology doesn't leapfrog the business entirely.

Rating: 3.50/5.0

Take a trip down LATAM way

US equities and narratives are increasingly dominant even among indices and portfolios that seek to exclude them. That's not been a bad thing, performance-wise, for most of us over the last 5 years or so. 

However, it might become an issue in the not too distant future, and some ideas about diversification would be useful if it does.

Bloomberg carried an article at the weekend which highlighted the dilemma faced by large pension funds and other investors who want to spread their bets away from the data centre and artificial intelligence story, which, to all intents and purposes, is the US equity story too. 

The manager of the $27.0 billion NYCRS pension fund, Monte Tarbox, was quoted as saying (of the effort needed to diversify a portfolio): 

“In many respects, it’s a terrifying time for somebody in my position,”

As retail traders and investors, we have more options and a greater degree of flexibility than a manager who is trying to get the optimum asset allocation for a $30.0 billion long-term portfolio, but even for nimble private investors the choices are limited. 

In recent weeks we have looked at UK dividends and equal weight versions of the S&P 500 as ways to dilute the influence of the data centre capex and AI boom narratives.

Today I am looking at some geographic diversification and focusing on Latin America, through the lens of the BlackRock Latin American Investment Trust Plc ticker BRLA LN.

The investment trust is a specialist in more ways than one. Its focus is on generating long-term capital growth and an attractive total return through investments in quoted Latin American Securities. 

The trust is benchmarked against the MSCI Latin America Index. And right now it's the only UK-listed investment trust with this mandate.

Right from the outset, I should say that this is a small fund with less than £100.00 million in market cap; it's also quite thinly traded with average daily volumes of just 56,000 shares. 

Ordinarily those two things might be enough to exclude the stocks from consideration. However, I see this as a long-term play rather than a short-term trade and, as such, I am happy to make an exception.

Given the size of the trust, it seems likely you will only want to make a modest allocation to BRLA, though one could add as, when and if it starts to outperform once more. 

On the plus side, the trust trades at an -8.0% discount to NAV, which BlackRock calculates at 453p.

Geographically, the fund is weighted towards Brazil and Mexico, which account for some 84.0% of the portfolio. From a sector perspective, Financial Services, Materials (Mining), Industrials, Consumer Staples and Consumer Discretionary are the highest weighted industries within the portfolio.

In terms of individual stocks, we find Vale SA, Southern Copper, Walmart de Mexico, Petrobras and Itaú Unibanco among the trust's top ten positions.  

The Trust pays a dividend and has an attractive yield of +5.50%. The portfolio is managed by Sam Vecht, who is also head of the Emerging Europe and Frontiers team at BlackRock. He has been with BlackRock since 2000.

Performance 

The BlackRock Latin American Investment Trust has posted a 12-month return of +19.33% and an impressive +63.81% gain over the last 5 years; however, we can't ignore that it underperformed its benchmark in that time frame. 

That, of course, is one of the additional risks you take when you invest in an actively managed fund, which tracks its portfolio performance and not the market return.

Overall Rating 3.5/5.0

Pros: exposure to Latin American equities at an attractive discount from a trust that yields +5.50%; diversification from US stocks and narratives with a focus on fast-growing economies like Brazil.

The trust directly benefits from US dollar weakness.

Cons: small and relatively illiquid stock, which could make it harder to enter and exit positions. Has underperformed its benchmark and other broad market LATAM indices; it retains some US exposure through the influence of the dollar and commodities like copper.

Technical outlook 

The trust was in a downtrend following the 15th April high, when the stock closed at 498p. However, it found support around 390p on August 19th, since when it rallied by around 20p; however, a band of resistance between 417p and 420p now needs to be overcome before the stock price can make further gains. A precursor to that would be establishing the price above the 50D moving average, found at 409.82p 

Rating 3.50/5.0

Fundamental outlook 

The trust’s discount to NAV and attractive dividend yield are additional draws to the stock, on top of its geographic exposure, which provides diversification from the dominance of US equities and narratives.

BRLA has recently been underperforming the MSCI Brazil Index (a proxy for the Brazilian equity market), which it has tracked closely in the past. The two instruments have been 88.0% to 90.0% positively correlated for much of the last 2-years

This divergence became noticeable in mid-August and has continued to date. However, given the trust's weighting towards Brazil and key sectors within its economy, that deviation does not look justified to me.

Rating 4.0/5.0

Get Your SPEX on

One of the harder things for an investor to do right now is to hedge or insulate themselves from the influence of AI, data centre capex, and technology.

In fact, I spent quite a bit of time at the weekend looking at ways to do that, but none seemed satisfactory.

Then I thought, rather than avoiding the tech cluster of the S&P 500, which has, after all, delivered a +773.0% price gain in the last 10 years, could we dilute its influence? 

The most obvious way to do this is to look at an equal-weight strategy in the S&P 500 index, which these days is the global touchstone for equities. 

Let's just unpack that

The S&P 500 index is weighted by market capitalisation, which means that the bigger a stock's market cap grows, the more influence, or impact it has on the index it's a member of.

That hasn't been too much of an issue until relatively recently. 

However, the advent of the trillion-dollar company changed that, and we are now in a situation where 5 stocks in the Information Technology sector have market caps of > $1.0 trillion. 3 of these are larger than $3.0 trillion; add in Meta Platforms and Alphabet from Comms Services, the latter of which has a market cap of $4.10 trillion, and you start to see the issue. 

Wider Issue

This issue does not just affect US indices; it's also spread further afield; for example, in the MSCI All Cap Weighted World Index or ACWI, US stocks now account for 63.0% of the weighting; indeed, Nvidia accounts for almost 5.0% of the ACWI on its own.

These stocks are literally the elephants in the room, larger than many countries and crowding out thousands of other stocks in the ACWI. There are 2400 stocks in that index, but most of the time only 5 or 10 get heard; it's even more concentrated in the S&P, which has 500 constituents but often disregards 490 of them.

However, by calculating an equally weighted version of the index, that bias is largely removed, because in an equal-weight index; all stocks are treated equally, and not some more equally than others.

There are several equal-weighted US equity-focused ETFs available to UK retail traders and investors. 

But I have gone with the Invesco SP 500 Equal Weight UCITS ETF (Accumulation units), which trades under the ticker SPEX LN 

Performance 

The concept of an equal-weight version of the S&P 500 index dates back to 2003; the SPEX ETF was established on April 6 2021, so we have just 5 years of performance data for the ETF.

However, we can use the S&P 500 equal-weight index as a close proxy. 

Looking at S&P Dow Jones own data over 10 years, the equal-weight index has returned an annualised +10.08% per annum, while the S&P 500 cap-weighted index has generated an annualised 13.66% in each of those 10 years. 

Over 3 years, the numbers are EW +13.20% CW +19.50%; over 1 year it’s +12.93% vs 16.24%. Zoom in to the year-to-date, however, they are basically neck and neck.

Of course, the idea of owning the EW version of the index is not to outperform but rather to dial down the noise of the Magnificent 7 and their close compatriots.

As of the end of last week 301 S&P 500 stocks were up on the year to date though only 202 of those were outperforming the cap weighted index. In an equal-weight version of the index, those stocks should be more visible.

Of course, the time when holding the more egalitarian version of the index should come into its own is in a downturn, particularly one that’s led by big tech. 

However, even by holding an ETF that aims to mirror the EW index, you won't avoid big tech entirely; indeed, Information Technology still makes up +14.70% of the index under this calculation method, but that is counterbalanced by both the Financial and Industrial sectors.

Overall Rating 3.50 out of 5.0

Pros: offers an alternative take on US equity index investing, SPEX avoids the cap weighted bias and dominance of one or two sectors in the traditional index. And provides a more realistic overview of the performance of large-cap US stocks.

Cons: SPEX won’t ever capture US exceptionalism as expressed by the Mag 7 and leading Chip stocks. SPEX is prone to tracking error above its annual cost base which could be down to infrequent rebalancing. The ETF is priced in US dollars and UK holders are therefore exposed to currency risk. 

Technical outlook

Right now SPEX is testing at horizontal support circa 5400 following a bearish crossover between its 10 and 50-day moving averages; a break here might take us back to 5316 with 5280/75 below that. 

If it were to test back to 5180, that might make an interesting entry point. 

However at the time of writing, 5400 is holding and the gap up at 5485 want’s filling.

Rating 4.0/5.0

Fundamental outlook

The S&P 500 is in rude health; it's trading on a forward P/E ratio of 19.1 times this below its 5-year average and only a smidgen above the 10-year mean, having just delivered a blended Q2 EPS growth rate of approximately 50.0%.

Analysts are looking for EPS growth of +25.0% or greater in Q3 2026 which would go along way to delivering an estimated growth of +28.70% for 2026 as a whole.

Sustainability is another question of course. However, growth is widespread, with Industrials, Energy and Financials all expected to continue to do well. Net profit margins in the S&P 500 are forecast to come in just below +15.0% in Q3 26 and this despite a confusing macroeconomic and geopolitical background 

Rating 4.0/5.0

Dividends Incoming

Dividend investing is something of a lost art in today's growth-driven stock markets, where share price appreciation has been the main vehicle for investors over the last 10 years or more. That’s been driven by the surge in US technology stocks and, in particular, the Magnificent 7, many of which have achieved valuations that are larger than those of national stock exchanges outside of the US.

However, the fact that something has fallen out of favour or fashion doesn't mean it's no longer valuable. 

As the proverb goes, “many a good tune has been played on an old fiddle” (apologies to Stradivarius).

We had a reminder of this earlier this year when, between June 10th and July 31st 2026, the FTSE 100 dramatically outperformed the S&P 500 by as much as +9.00%. 

Much of that outperformance was attributed to the FTSE's lack of technology exposure and to its high concentration of dividend-paying stocks, many of which are also multinational blue chips. 

A report from Schroders in June 2020 highlighted the fact that the FTSE 100 barely moved between New Year's Eve 1999's record close at 6930 and the end of 2019. The total return on the index over those 20 years was +122.0%. 

How could that happen? The answer is dividends 

Of course, since then the FTSE has added almost 4000 points, but dividends remain as important today as they did 26 years ago.

To that end, I want to talk about a dividend ETF, namely the iShares UK Dividend UCITS ETF ticker IUKD LN. 

If we do see markets seriously question the data centre boom, its sustainability, financing, and nested nature, then IUKD could be an uncorrelated hedge or safe haven.

The ETF, which is managed by BlackRock, provides income and capital growth to investors by tracking the performance of UK companies with relatively high and stable dividends. Its benchmark is the FTSE UK Dividend+ Index, and its annual charges are 0.40%. 

The fund has 50 holdings, many of which would qualify as household names to equity investors and consumers alike. IUKD was launched in 2005 and has assets under management of some £1.35 billion. 

There is a weighting bias in the portfolio towards financials, which make up almost 44.0% of the fund; consumer staples, real estate and energy account for another 32.0%. Legal and General is the fund's largest holding; the ETF makes quarterly distributions and is rebalanced on a semi-annual basis.

Performance 

As of September 3rd, the fund has produced a return of +211.0% since inception.

Over 10 years, it's up by 93.96%; in 5 years, it's grown by +82.29%. Year to date, the ETF has seen its price rally by +14.26%. 

In the first 8 months of 2026, the ETF has outperformed the FTSE 100 index by almost +1.60%. And over 3 years, IKUD has outperformed the UK blue-chip index by +12.50%, though the FTSE fares better over longer timeframes. 

Overall Rating 4.0/5.0

Pros: Captures the performance and dividend payments of 50 UK equities, many of which are blue chips; recent and medium-term outperformance of the FTSE 100 index. IKUD can be held within an ISA or a SIPP, making the dividends and price appreciation tax-free; it has an attractive trailing dividend yield and average volumes of almost half a million shares are traded daily. Has been and could continue to be an attractive hedge against the data centre-led US indices.

Cons: Has a relatively narrow list of holdings with a significant bias towards UK financials; Annual charges are high when compared to the cheapest US ETFs. Has been outperformed by the FTSE 100 in the medium to longer term. Dividends are a bonus, not a guarantee; they can vary greatly or even be withdrawn. 

Technical Outlook 

Technically, IUKD looks solid; in fact, the ETF has spent no real time below its 50-day moving average since the spring of 2024. The 200-day line is found down at 981.50p, and RSI 14 for the ETF is at 53.23. I note that the RSI 14 has crossed above its own 5-day MA line, suggesting that we could see an uptick and associated price rise. 

Rating 4.0/5.0

Fundamental Outlook 

From a fundamental standpoint, the fund looks good too; it does what it says on the tin, though there has been some tracking error/deviation from the fund's benchmark index over time; the gap appears to be narrowing in recent periods. The trailing 12-month dividend yield of +4.60% looks good for a fund with diversified holdings, and a P/E of 15.72 times is at the top end but not appreciably outside of the recent range of the PE for the FTSE 100 itself. 

Rating 4.0/5.0

The Gas Station Quietly Becoming a Pizza Empire

Casey’s General Stores CAY US is the kind of stock that you could drive past and not even notice, but that would be a mistake, because, against a difficult macroeconomic background, it's carving a niche for itself and winning over the next generation of American consumers. From humble beginnings, Casey’s now operates more than 2900 stores across 19 states and is on course to add 120 new locations this year and next.

Casey's proposition is a gas or petrol station and convenience store combined; the company’s focus is on small-town America, communities with a population of 20,000 people or less; indeed, 50.0% of Casey’s sites are in or nearby towns with 5,000 residents or fewer. Casey’s has become a community hub supplying fuel, essential groceries and convenience. 

Small populations don’t equate to limited spending, however, and the average revenue for Casey’s stores sits just below $6.0 mln per annum.

It's easy to forget just how big the US is, and despite almost 3000 outlets, it transpires that 75.0% of towns (under its current footprint) that meet Casey's rural demographics don't have a store. 

There could be up to 4500 towns and settlements where Casey's could start operations within its existing area of operations, and there are other territories, such as Texas, where Casey’s has no presence at all.

Casey’s has a market cap of just under $28.0 billion and annual revenues of $17.56 billion; those revenues have grown by approximately +20.0% per annum over each of the last 5 years, though interestingly earnings have grown at + 24.0% during that period.

How has that happened?

Well, it's happened because Casey’s is selling more high-margin products such as prepared food, which has margins of 58.0% compared to an overall average of 23.50% according to research from Bank of America (see below). In fact, by some measures, Casey’s is now the 5th largest pizza chain in the US. You can probably see the opportunity here: grow the number of outlets, grow the volume of high-margin sales at those outlets.

Casey's has won favour from younger consumers in the US and a Pizza breakfast (particularly in college football, now becoming something of a ritual with 32.0 million pre-noon or breakfast pizza slices being sold in Casey’s stores.

Performance 

Casey’s stock price has risen by +295.0% over the last 5 years, and by +472.0% over the last decade. Year to date, the shares are up by +36.0%, but they have stumbled over the last month, falling by -13.60%. And it's now almost -19.0% below its year-to-date high, but it does seem to have found some support around $738.0/$740.0.

Broker RBC raised its target price on the stock to $913.0 in late July but left its rating at sector perform, because of oil price volatility. Sales of fuel make up more than half of the average turnover per outlet, so the stock is sensitive to oil and fuel prices. Gross margins on fuel sales are around just over 10.00%.

Casey's reports earnings after the market closes on 08/09/2026. The market is looking for EPS of $6.59 for the quarter and an annual run rate of $21.11. If it can post a beat and perhaps more importantly offer improved guidance into the year-end, and evidence its push for higher margins is working, then it could retrace its recent losses.

We can afford to wait for the numbers, which will either make or disprove the investment case before jumping in.

Overall Rating 4.0/5.0 

Pros: Casey's operates in niche markets in rural Midwest America where it has something of a captive audience and a growing reputation among younger consumers. Gross margins on prepared food such as Pizza are far higher than high-volume, low-margin fuel sales. The total addressable market for Casey's in the Midwest is huge, and its mix of expansion through acquisition and organically (adding new sites) means it can grow to exploit this underserved market without breaking the bank.

Cons: Low-margin fuel sales make up more than 50.0% of Casey’s sales; the uncertain macro background is keeping prices elevated and could squeeze consumer spending, particularly on discretionary items. Younger consumers are daddy, and whilst Casey's is enjoying its moment in the sun, that may not last forever, and the Instagram generation may move on to other things/venues. High valuation has priced in a lot of good news both now and in the future; management needs to continue to deliver to justify its premium rating. 

Technical Outlook 

The stock remains supported around $740.00 and is some $30.00 above its 200 Day Moving average, which it hasn’t spent any meaningful time below for more than 6-years. The 20 day correlation between WTI crude and Casey’s stock price is weakly negative at the moment, suggesting that what happens to Casey's stock price from here is likely to revolve around its earnings report. Rather than Middle East politics.  It's interesting to note that the volumes traded over the last three days have been above average daily volumes.

Rating 3.0/5.0

Fundamental Outlook 

As we have already noted, Casey's enjoys a niche within US retailing, but it also enjoys a high multiple with a forward PE of 36.00 times, a similar rating to another Midwestern stalwart, Walmart. Casey’s can justify and grow into a PE ratio that characterises it as a growth stock, but like its retail sector peers, it needs to be diligent in its execution to do that. 

Casey's is a dividend payer, and over 5-years the dividend has grown by almost +67.50%, not spectacular but better than we might have expected given that much of Casey’s cash is reinvested in the business. Ultimately, its growth story in a part of America that's often overlooked by Wall Street.

Though analysts there seem to like it, with 12 buys and 7 hold recommendations among those that research the stock. The mean price target among this group is $957.00, which is more than +27.0% above the current stock price of $752.00.

Rating 4.0/5.0

Maurel & Prom has been involved in oil and gas in one form or another for over a century; the current incarnation of the business dates to the late 1990s, when the former shipping line (which was founded in 1831) pivoted to focus on hydrocarbon exploration and production.

Since then, it has built a footprint in Africa and South America, and counts Indonesia's national oil company, Pertamina, as its biggest shareholder with 71.0% of the business. 

At the end of 2025, the company employed 810 people, 81.0% of them in Africa, and held reserves of 294.8 million barrels of oil and oil equivalents. In the past twelve months, M&P has restructured its portfolio through a series of disposals and acquisitions.

Back in 2010, M&P was a founding shareholder of Seplat, a Nigerian energy producer, and in December 2025 it sold its entire 20.0% stake for $496.0 million.

The company's half-year results, which were published on 6 August 2026, suggest the Seplat windfall could just be the opener. At the half-year stage, M&P’s production volumes had reached 37,890 boepd (barrels of oil equivalents per day), and revenue had risen by +27.0% to $366.0 million, Thanks to an average oil price of $103.8 per barrel, up by +46.0% on the year before 

EBITDA jumped +63.0% to $227 million. Free cash flow was up +21.0% at $77.0 million. The firm's net cash position grew to $257 million, even after a dividend of €0.38 per share, which itself was a +15.0% increase on the prior year.

The real news, however, was the deal to buy Gran Tierra Energy's assets in Colombia and Ecuador. 

A portfolio which produced 29,026 bopd in the first half of 2026 and that has 144.0 million of certified reserves. M&P is targeting production of around 40,000 bopd by 2029–2030, which would boost the group's current output by +100.00%. A large portion of the $1.33 billion cost of the deal is being met through a rollover of Gran Tierra's existing bonds and prepayment facilities, rather than with new cash or equity. And M&P has also arranged a refinancing of its own bank debt.

Performance

M&P shares rallied sharply from December 2025 onwards, buoyed by the sale of its Seplat stake and later by the sharp jump in oil prices thanks to Trump’s war with Iran; the stock price peaked at €11.44 in mid-March and drifted lower thereafter, finding support around €7.52 in July, before bouncing again in August on the news of the deal with Gran Tierra.

Unsurprisingly, the stock is positively correlated to oil prices; that figure is running at +86.00% versus the spot price of WTI right now. And with oil prices up almost +49.0% year to date, the situation in the Strait of Hormuz is unresolved, which should help to underpin the stock price. 

I am looking for a break above €8.65, which should open the way to €9.30 and €9.68, with €10.20 possible thereafter. 

Overall Rating 4 out of 5

Pros: M&P generates decent free cash flow, pays dividends and has a strengthening net cash position. Its production of oil and gas keeps ticking higher across a geographically diverse asset base. 

The Seplat disposal proceeds have largely pre-funded the Gran Tierra acquisition, and the OFAC licence granted by the US removes a large chunk of Venezuelan regulatory overhang. The Colombian assets it's acquiring can and should produce more O&G than they currently do. M&P has no exposure to the Middle East, whilst Pertamina's backing supports favourable financing terms that a standalone independent of this size would struggle to access.

Cons: There may be no Middle East exposure, but the firm has exposure to Venezuela, a jurisdiction where sanctions policy can and has changed quickly, and which has experienced large earthquakes as recently as June 2026. The Gran Tierra deal is substantial relative to M&P's own size and brings integration risk, execution risk on the targeted production growth, and added leverage even with the bond rollover. Oil price swings flow straight through to M&P's top and bottom lines; a peaceful resolution to the Iran war could be detrimental.

Technical outlook: 

We have just seen the 10-day MA line cross up through the slower-moving 50-day line, a sign of rising price momentum. RSI 14 sits at 53.50, and the stock has recently tested near-term resistance around €8.65. Encouragingly, we have seen 3 new 5-day highs in recent sessions; the stock remains up by more than +50.0% year to date. All of which says to me that it can run further with the right catalyst.

Rating 4 out of 5

Fundamental outlook

Trading at a forward PE of around 6.0 times earnings with a dividend yield of some 4.48%, M&P looks cheap; integrating the Gran Tierra assets and boosting production in Venezuela could be transformational for the company, especially if oil prices remain at the current elevated levels; even if they do dip, the added volumes should help compensate somewhat. Analysts rate the stock as a buy with a €10.38 price target. However, I think that is likely to be revised upward, particularly if the company starts producing 80,000 boepd, or more, in the not too distant future. E&P is a risky business, of course, but with that risk can come rewards, and M&P looks well placed to secure them.

Rating 4 out of 5

Thanks for the memories 

The AI story is investing marmite; you either love it or hate it, or at least have learned to live with it, whilst trying to avoid the hyperbole that swings from extreme bullishness to bearishness and back again.

I am a sceptic about some aspect of AI because I have yet to see genuine productivity gains and cost savings in the earnings reports of major listed equities. And the economics of AI providers such as OpenAI and Anthropic are opaque at best, and highly questionable at worst.

However, I am also a pragmatist who realises that you can't ignore what's going on around you; to that end, I have taken the view that the way to play AI is to look at those stocks that are selling the “Picks and Shovels” to those who are panning for gold.

And with that in mind, I would like to draw your attention to Sandisk SNDK US.

Until recently, the company was owned by Western Digital, which had acquired Sandisk for just $16.0 billion in May 2016.

However, in February 2025, just over 80.0% of the company was spun into a standalone business and listing, with Western Digital retaining a 19.99 stake in what would become one of the greatest examples of the realisation of shareholder value ever.

Sandisk initially traded at a market cap of just over $7.0 billion at $52.0 per share. 18-months later, the stock is trading at $1735.00 with a market cap approaching $250.00 billion. Be aware that both the stock price and the market cap have been much higher in the interim.

Sandisk makes memories, not days out with the family or friends, but storage for use in electronic devices and digital infrastructure/ To be specific, it makes NAND flash memory and storage. NAND memory is non-volatile; that is, it retains information even when the power is turned off.

Sandisk is one of 5 major players in the flash memory space globally, but it's not the market leader, though it has a market share of circa 13.0%. 

However, in enterprise-scale SSDs, or Solid-State Drives, its market share is far lower at around 4.10%, and it's in this area that growth opportunities may lie, because these SSDs are used in data centres. 

Sandisk is no start-up; rather, it's an established business and industry leader with some 7900 active patents, and 3200 more that are pending.

The company recently held an investor day at which it said it expected revenues to grow by mid-to high-teen percentages between 2028/30, and that it would sustain gross margins around 80.0% in this period. 

Sandisk has entered into longer-term supply arrangements with its major customers, and those contracts increase its earnings visibility. There is also the tantalising possibility that high-bandwidth flash technology could be used to complement or even replace HBM memory, which is an essential component for AI GPUs that power today's AI chatbots and LLMs.

You can treat Sandisk as a long-term holding, or as a stock to trade, going long on positive news but coming out when the mood music changes, as it did in late June.

Performance

Sandisk's performance has been extraordinary, and you have to wonder if even Western Digital really understood what they had on their hands when they spun Sandisk out.

That point is reinforced by the fact that Sandisk now has a far larger market cap than its former parent, which sits at a valuation of $175.0 billion. 

Over the last 52 weeks, Sandisk stock has appreciated by 3415.66% according to data from Barchart.com; however, the stock has been considerably higher than its current levels, having printed at $2354.39 on June 22nd.

You should also be aware that the stock is up by more than +35.0% in the last week, which included the investors' day, when the price popped by just under +14.0%. Thursday and Friday of last week saw volumes traded exceed 20.0 million shares, well above the 16.80 million daily average. 

Sandisk is also the best-performing stock in the S&P 500 relative to the index, year to date, with an outperformance of +577.0 %; its nearest rival on this metric, Dell Technology, has a reading of “just +277.0%.

Why has Sandisk been able to generate such impressive returns? 

Quite simply, memory markets have a shortage of supply and outsized demand; the latter has been driven by data centre Capex, which runs into the hundreds of billions of dollars. 

A rising tide lifts all ships, they say, and in this instance it's driven up memory prices both for data centre usage and adjacent sectors, causing supply-chain constraints and forcing memory users to compete for access to the technology; even the likes of Apple are having to review their position and suppliers because of rising costs.

Now for the killer piece of information: the 12-month forward PE for Sandisk is just over 7.30 times. 

If you measure EPS growth rates at the business on a quarterly basis, you come up with triple-digit percentages; applying a more conservative annual measure generates a growth rate of more than +42.0%

Sandisk has not yet paid a dividend, but the company has indicated that it aims to return 100% of excess cash to shareholders when it can.

Wall Street analysts that cover the stock (of which there are 24) view Sandisk as a strong buy with an average price target of $2139.0 versus the current price of $1724.

Overall Rating *****

Pros

Sandisk is in a goldilocks moment in the memory market; it has pricing power and is facing increasing demand for its products, which could continue for another 4-years or longer. There are significant barriers to entry into the sector, and its competitors are almost all maxed out in the current climate.

Sandisk has the potential to grow further in the enterprise-scale SSD markets and to develop flash technology that can compete with HBM products (High Bandwidth Memory) from rivals such as Micron, SK Hynix, and Samsung.

Sandisk sits on an undemanding multiple more suited to a commoditised value stock than a tech leader at the forefront of the memory chip markets. 

Cons

The data centre capex boom sounds too good to be true, and some analysts have questioned how sustainable it is longer term. Memory markets have traditionally been highly cyclical; If the excess demand the boom has created were to disappear, so would a large chunk of Sandisk's growth trajectory. 

The semiconductor supply chain is fragile and full of possible choke points which could limit Sandisk's ability to operate efficiently, meet large-scale orders and/or push up its manufacturing costs. 

Technical outlook

As the chart clearly shows, Sandisk was in a meteoric uptrend for 9-months until it wasn’t; buyers lost control of the market on the 22nd June when we saw a gap-up, but then posted a high-wave candle, a rejection of a move higher. Following which it printed a series of lower highs and lower lows. Until it bottomed on July 29th, since then the stock has rallied by almost +$700. The 50-day MA line has turned upward; we have posted 5 consecutive days of gains and 5-new highs in that time, part of the 49 new highs seen in the stock year to date. Even now, the stock sits at an RSI 14 reading of just 57.

Rating*****

Fundamental outlook

Sandisk’s fundamentals look excellent: a low PE, high earnings and revenue growth rates, with an order book/long-term contracts worth almost $94.00 billion. It has no debt and holds significant cash reserves. 

Management is looking to expand the company’s presence in higher-margin markets, and, where possible, move to long-term supply agreements, under which prices are quantifiable rather than variable, as is the case with short-term contracts and spot pricing of memory products. Effectively, larger clients are paying for access and supplies. 

The caveat is that AI capex is the main driver for the businesses and the wider sector. If the hyperscalers and their clients sneeze, Sandisk could catch a cold.

Rating ****