Storm Uru, fund manager at Liontrust Asset Management, has highlighted three stocks that he believes have previously been "left behind," but have now adapted their businesses models to become more competitive within their sectors. Uru told CNBC's "Squawk Box Europe" on Friday that he liked oil major BP , contract caterer Compass Group and credit card provider American Express . "Originally they were kind of left behind and they were going to find it very hard to compete" with newer upstarts, Uru said. However, he said that these companies had been "working very hard" at pivoting their business models over the past couple of years and believed they were "starting to become more competitive" in their sectors. Uru holds all three stocks in the Liontrust Global Dividend fund that he co-manages. American Express is also one of the stocks in the Liontrust Global Equity fund that he co-runs. BP In the case of BP, Uru said the oil major had done "a very good job of outlining a very good way forward for the company in a low carbon intensity economy." Nevertheless, he said BP had to stick to its target of seeing a return of between 8% and 10% on any capital investments it makes on renewable energy. In addition, Uru said one of the reasons Liontrust preferred BP over other companies in the same sector was because it was willing to get rid of "underperforming assets," which the firm hadn't yet seen from other oil and gas conglomerates. For example, BP announced in June 2020 it was selling its global petrochemicals business to Ineos for $5 billion. Uru pointed out that oil and gas company Exxon Mobil had only just started to consider pledging to cut its carbon emissions to net zero by 2050 , for instance — "so there's a lot of companies who are well behind the curve," he said. Uru added that BP's issues over the past decade had been "well documented," giving it the "mandate to start with a blank slate which is what we like about the company." Compass Group In the past, Uru said Compass Group had tended only to cater for larger companies with more than 300 employees, in order to ensure enough scale to be profitable on those contracts. Over the past two years, however, he said Compass had started to pivot its business to service smaller companies, pointing out that 45% of firms in the U.S. actually had fewer than 300 employees. In major cities Compass has set up dark kitchens , which are workspaces for restaurants to produce food offsite for delivery only. Last year, Compass developed its own click and collect app "Time2Eat," as well as acquiring food tech start-up Feedr. Uru said that alongside having its own logistics delivery staff, Compass had also partnered with Deliveroo to deliver meals to smaller offices. "So they've just changed who they can service and provided a whole range of new services to a new cohort of customers," Uru said, which made the business "incredibly attractive." American Express Uru said American Express had previously failed to compete with its main competitors Visa and Mastercard because more retailers accepted their credit cards. However, he said that over the past three years American Express had carried out an "aggressive strategy to acquire more merchants." In fact, Amex said in the second quarter the largest portion of its spending growth came from Generation Z and millennial card holders , as well as its small business customers. Uru said this demonstrated that Amex was seeing a "great uptake" by new customers and that the results showed that this new cohort was spending on leisure and travel. He said this was even before international travel had really opened up again with the easing of coronavirus public health restrictions, suggesting that this was a good sign for Amex, with a lot of its business still exposed to travel and leisure spending.
A customer uses an iPhone to make a purchase via the Apple Pay system from their American Express account in London, U.K., on July 14, 2015.
Chris Ratcliffe | Bloomberg | Getty Images
Storm Uru, fund manager at Liontrust Asset Management, has highlighted three stocks that he believes have previously been "left behind," but have now adapted their businesses models to become more competitive within their sectors.