Shares for the future: how I’ll pick four new shares for my portfolio
A takeover and trio of unattractive constituents means analyst Richard Beddard is on the lookout for replacements. But finding quality businesses is harder than it used to be.
7th August 2026 15:00
by Richard Beddard from interactive investor
Advanced Medical Solutions Group (LSE:AMS)’ board is recommending shareholders accept a cash offer from HB Fuller, the largest pure-play adhesives company in the world. The takeover means AMS is likely to disappear from the UK stock market, the Decision Engine, and the Share Sleuth portfolio.
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Acquisitions are generally not welcome. I try to populate the Decision Engine with shares that will grow over the long term, and prefer to hold them until they realise their full potential.
Fund managers with more immediate objectives will probably find more joy in the deal and wave it through at the vote to approve it on 12 August.
Portfolio allocation
The Decision Engine is a portfolio allocation tool. It calculates the proportion of the total value of a portfolio that I should allocate to each of the 30 shares included based on their scores (see this explainer for the formula). This includes all the shares in my Share Sleuth portfolio plus a handful of extras, candidates to join the portfolio.
The AMS deal will reduce the number of shares in the Decision Engine to 29. In time I will find a replacement to maintain the number of Decision Engine shares at 30.
Ideally, I need to find more than one new share because a quick assessment of the four Decision Engine shares that are not in Share Sleuth indicates that three are fairly unattractive candidates:
| company | description | score | qual | price | ih% | |
| 9 | Judges Scientific | Acquires and grows businesses that manufacture scientific instruments | 7.4 | 6.5 | 1.0 | 4.9% |
| 14 | Cake Box | Cake shop franchise and sweet manufacturer | 7.1 | 7.0 | 0.1 | 4.2% |
| 18 | Auto Trader | Online marketplace for motor vehicles | 6.9 | 6.0 | 1.0 | 3.9% |
| 19 | YouGov | Surveys public opinion and conducts market research online | 6.9 | 6.0 | 0.9 | 3.8% |
Click on a share’s score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.
Their scores range across 9th-ranked Judges Scientific (LSE:JDG) (7.4), 14th-ranked Cake Box Holdings Ordinary Shares (LSE:CBOX)(7.1), 18th-ranked Autotrader Group (LSE:AUTO) (6.9) and 19th-ranked YouGov (LSE:YOU) (6.9).
These scores are average but, worse than that, Judges Scientific, Autotrader and YouGov owe their middling scores to their low share prices. The median quality score (‘qual’column) in the Decision Engine is 7. Only Cake Box achieves it.
If I added Judges Scientific, Autotrader, or YouGov to the Share Sleuth portfolio they would probably not improve its quality.
Doubling down on quality
Quality, as I define it, is the relationship between the capabilities I can identify in a business, risks that could undermine those capabilities, and the company’s strategy.
To give me confidence in a company’s capabilities it must have generated healthy profits and cash flow in broadly the same way for many years. I must believe the risks I can identify are not so severe that they could stop the company using its capabilities profitably. And the company’s strategy, how it plans to make more money, must build on its capabilities and address the risks.
Capabilities, risks and strategies are what I think about when I am researching a business, and the factors that I score when I evaluate it.
In other words, I’m looking for companies that don’t have to change much to prosper through thick and thin and grow over the long term. The managers of these companies should be improving an already successful business.
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Fundamentally, I believe capabilities, risks and strategies determine returns over the long term. And I believe identifying businesses that are not broken and don’t need fixing is easier than the alternative, which is trying to work out whether broken businesses can and will be fixed.
Finding quality businesses is harder than it used to be, though, because of our more febrile times. Geopolitical ructions shaking global trade, technological disruption in the form of AI, and climate change, are giving long-term investors much more to think about.
Businesses that performed well a decade ago are challenged by global instability in the current one. Businesses that appear to be thriving are sometimes so novel it is impossible to know what to make of them.
To my mind, that means I must double down on shares where I can identify quality. Obviously, it is a mathematical certainty that some shares in the Decision Engine will have a sub-par quality score, but it is a reasonable objective to try and replace those that do with shares that will lift the median rather than reduce it.
Aside from the sub-par candidates, there are four Share Sleuth shares that have quality scores below the median. They are Churchill China (LSE:CHH), Focusrite (LSE:TUNE), Macfarlane Group (LSE:MACF), Advanced Medical Solutions and Renishaw (LSE:RSW).
| company | description | score | qual | price | ih% | |
| 17 | Churchill China | Manufactures tableware for restaurants etc. | 7.0 | 6.0 | 1.0 | 4.0% |
| 22 | Focusrite | Designs recording equipment, synthesisers and sound systems | 6.0 | 5.5 | 1.0 | 3.0% |
| 23 | Macfarlane | Distributes and manufactures protective packaging | 6.5 | 5.5 | 1.0 | 3.0% |
| 26 | Advanced Medical Solutions | Manufactures surgical adhesives, sutures and dressings | 6.2 | 6.5 | -0.3 | 2.5% |
| 30 | Renishaw | Makes tools and systems for manufacturers | 4.8 | 6.5 | -1.8 | 2.5% |
Click on a share’s score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.
I have reduced the scores of all these shares in recent years, often as their businesses have proved vulnerable to the more unstable economic conditions we are living through, and sometimes because of choices the companies have made themselves.
As things stand, I am unlikely to add to these holdings. They will be at risk if I find better-quality candidates for the Decision Engine.
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You may well have noticed AMS, the share about to be wrenched from my grasp by an acquirer, is one of them. Perhaps the deal is not such a bad thing, at least for AMS shareholders.
In case you are wondering why HB Fuller, a company that makes adhesives for packaging, wood, labels and post-it notes, is interested in a medical business, AMS makes surgical adhesives and sealants (as well as sutures and dressings).
There may be a sensible rationale, but one of HB Fuller’s investors condemns the deal because it takes the firm into geographical and regulated product markets that it has little experience of (among many other reasons).
No shares for the future
I am on holiday and filed this article in advance. I have not updated the Decision Engine table. Last week’s table is at the bottom of my article scoring Focusrite.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns AMS and many shares in the Decision Engine. He weights his portfolio so it owns bigger holdings in the higher-scoring shares.
For more on the Decision Engine and Share Sleuth, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
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