Share tips of the week

MoneyWeek’s comprehensive guide to this week’s best share tips from the rest of the UK’s financial press.

Three to buy

3i

The Sunday Telegraph

This private-equity firm has “sharply outperformed” the FTSE 100 over the last year, boosted by investments such as Dutch discount retailer Action. 3i bought a stake in the firm six years ago for £114m that it now values at £1.4bn. Its investments have delivered an average 20% return on equity in the last five years. “Don’t bet against it continuing to outperform.” 771p

Prudential

Investors Chronicle

Many UK-listed life assurers are moving into Asia, but Prudential started earlier than most and is the furthest along in developing a presence in the region. This has helped it to deliver strong growth despite low interest rates and mounting political uncertainty. Despite that, the shares trade at a discount to peers. 1,677.5p

Shaftesbury

The Mail on Sunday

This property group owns 600 buildings in London’s West End. Rental income has grown every year for the past decade. The shares have risen after interest from Hong Kong billionaire Samuel Tak Lee, who has acquired an 18% stake. Regardless of whether a bid emerges, the shares offer value to investors, as West End property is “relatively shielded” from fluctuations in the wider property market. 964.5p

Three to sell

BT

The Sunday Times

The telecoms giant has been in trouble ever since its shares plunged 20% in January after an accounting scandal in Italy. Add in a long-running battle with regulator Ofcom and a pensions deficit that could be as much as £11bn and you have a “constellation of problems”. The group’s new leadership is capable, but challenges on multiple fronts mean the shares are best avoided. 313p

Mediclinic International

The Times

Mediclinic runs a “hotchpotch of hospitals and clinics in southern Africa, the Middle East and Switzerland”, which also owns a 29% stake in separately listed Spire Healthcare. These disparate markets bring a collection of different problems, and it’s hard to discern huge benefits from the territorial mix. The shares still look overvalued, despite recent bad news. 759.5p

Mothercare

Shares

News of 4.5% growth in fourth-quarter like-for-like sales at this retailer have raised hopes of a turnaround. But growth has been driven by the online operation – which accounts for 40% of UK revenues – suggesting its 152 UK shops are more of a burden than a boon. Competition is “cut throat” and inflation pressures are mounting. All told, the stock looks like a “value trap”. 122p

And the rest

The Daily Telegraph

Property group CLS Holdings has just sold a London site to a Chinese developer (1,940p). Middlefield Canadian Income investment trust offers a good way for investors to diversify overseas (108.5p).

Investors Chronicle

Warehouse specialist Segro will benefit from the growth of online retail (462p). Last year was a tough one for home safety specialist Sprue Aegis, but it has responded well (182.5p). Oil producer President Energy offers “enticing value” for those with an appetite for risk (7p).

Shares

Positive data from trials for a new antibiotic suggests Motif Bio’s share price could soon rise (30.25p). Strong results at JD Sports Fashion have led to analysts upgrading their forecasts (440.5p). Bluejay Mining aims to be one of the world’s lowest-cost mineral sands producers (13.75p). Business energy supplier Yu Group hopes to disrupt a multi-billion-pound market (287.5p). Home emergency repairs firm Homeserve is riding high after its latest trading update (647p). Asset manager Liontrust is one of the sector’s top performers (422.5p). ImmuPharma’s new drug for lupus could be a game-changer (55.25p).

The Times

Banknote printer De La Rue’s move into hologram-based authentication is still not fully appreciated by the market (663p). Shares in retailer WH Smith have risen a long way already, but international expansion into markets such as Singapore promises more to come (1,788p).

A Swiss view

Shares in Bobst Group, a supplier of packaging equipment and services, have jumped by 70% in the past year. But there should be further to go, according to Finanz und Wirtschaft. The company, whose products include machines that make cardboard boxes and equipment to manufacture or print on flexible packaging materials, is on track to grow earnings per share by 35% between 2015 and 2017. Last year sales rose by 8.7% to SFr1.4bn and net profits grew by 16% to SFr84m. The long-term outlook for the worldwide packaging industry is encouraging due to the growth of online shopping and the gradual rise of emerging-market consumers. Despite Bobst’s impressive prospects, however, the stock is still trading at a slight discount to the Swiss market’s industrial sector, and deserves a re-rating.

IPO watch 

Leading Dutch construction group VolkerWessels is to list on Amsterdam’s Euronext exchange in “the coming weeks”, according to a statement released on Tuesday. It is expected to raise around €2bn by floating between 30% and 40% of the company’s existing privately held shares, says Duncan Robinson in the Financial Times. The company, which is currently owned 100% by the Wessels family, is the biggest construction firm in the Netherlands by revenue. It also has operations in the UK, North America and Germany. It had sales of €5.5bn in 2016, with earnings before interest, tax, depreciation and amortisation (Ebitda) of £254m. It intends to pay out between 50% and 70% of its annual net income in dividends.