MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK’s financial press.
Three to buy
The Sunday Telegraph
All those shots of Robinsons squash on centre court make Wimbledon a highlight in the marketing calendar for Britvic, the brand’s owner. Next year’s introduction of a UK sugar tax brings renewed uncertainty for soft drinks makers, yet the majority of Britvic’s portfolio will be exempt from the tax. The shares still trade at a sharp discount to competitors on 13 times next year’s forecast earnings. 709.5p
Marks & Spencer
The Mail on Sunday
Britain’s best-known high-street chain reported a 64% fall in annual profits in May on the back of weak clothing sales and steep restructuring costs, but could now “turn the corner”. Chairman Robert Swannell is stepping down, to be replaced by Archie Norman, who turned around Asda in the 1990s. The “Archie factor” has created buzz, but the shares have fallen. “At the current share price, M&S is a buy.” 344.5p
The simplest route to stockmarket success is to “buy and forget” quality stocks and this consumer-goods giant is an excellent candidate. Unilever boasts a strong balance sheet and its stable of well-known brands – which includes Dove, Domestos and Marmite – gives it pricing power, as seen during the “Marmite war” with Tesco last autumn.
The 2.7% dividend should “grow in both good times and bad”. 4,156.5p
Three to sell
The Sunday Times
The rise of the electric car will bring problems for oil producers in the future. BP recognises that and has sold over £39bn of assets since the 2010 Deepwater Horizon disaster to stake its future on gas and retail. The firm is modernising – yet its forecasts for electric-car uptake remain “fancifully low” after Volvo said it will use electric and hybrid engines in all cars from 2019. 444p
Ocado shareholders are waiting to discover the identity of the European retailer that has licensed its platform software. The online supermarket is in discussions with potential partners and said that Amazon’s acquisition of Whole Foods could be a catalyst for further licensing deals. Revenue was up 12.5% in the half-year to the end of May, but underlying operating profit dipped. Sell. 292p
Porvair provides filters to highly regulated industrial markets, such as aluminium smelting and aviation. The specialised work ensures plenty of repeat business, recent results have been impressive, and investors could hardly ask for a more experienced management team. However, a price/earnings (p/e) ratio of 28.4 is too high and a 0.8% dividend yield is too low. 549p
And the rest
The Daily Telegraph
Broadcaster Sky is worth buying whether 21st Century Fox’s £10.75-a-share-bid goes through or not (998p). The latest numbers suggest that the turnaround at retailer Morrison’s is on track (237.5p).
Saga, which provides various services for the over-50s, has a strong brand and a growing market (208p). Pharmaceutical company Dechra is well placed to profit in the fast-growing animal healthcare sector (1,699p). Shares in commercial property firm McKay Securities look “seriously undervalued” (229p).
Fire-protection specialist Marlowe will benefit as local authorities and firms check their fire safety compliance (380p). Relatively unknown NMC Health is the largest private healthcare provider in the UAE and could be poised to join the FTSE 100 in September (2,103p). Rising electric car sales have shaken confidence in catalyst maker Johnson Matthey, but it has growth potential (2,883p).
Expansion at Empiric Student Property will support a 5.6% dividend yield (111p). Waste-management firm Biffa has made its first big acquisition since floating last year (229p). Housebuilder Persimmon offers an excellent dividend (2,345p). The scrapping of EU sugar quotas this autumn will trigger a profits bounce at Associated British Foods (2,997p). Shares in engineering consultancy Ricardo sell on a “very reasonable” 14 times earnings (779.5p).
US-listed Blue Apron had a tough first week as a public company after its shares fell more than 20%, making it one of the worst performing initial public offerings (IPOs) year-to-date. Days before the meal-kit delivery service was set to float, Amazon announced plans to buy upscale grocer Whole Foods for $13.7bn, instantly raising the prospect of a major new competitor with extremely deep pockets in the food-delivery sector. Blue Apron had to reduce its target IPO price range from $15-$17 per share to $10-$11, and ultimately opened at $10.
Yet Wall Street “is still wary of backing the wrong horse”, says Maya Kosoff on the Vanity Fair website, and the stock subsequently slid further to end the week at $7.73. The firm made a loss of $54.9m on revenue of $795m in 2016.
An American view
Shares in Bristol-Myers Squibb have slipped of late, says Vito Racanelli in Barron’s, due to a disappointing drug trial. But the fall is overdone. Bristol is “the leader in high-tech cancer treatments”, especially when it comes to immuno-oncology (IO). Opdivo, the group’s top IO product, uses the body’s T-cells to recognise and destroy cancer cells. IO therapy is more expensive than chemotherapy, but has fewer side-effects. Opdivo comprises a fifth of overall sales, while the IO market could be worth $20bn-$25bn by 2020.
A trial last year showed that Opdivo was no better than conventional chemotherapy as a first-line treatment for lung cancer, but Opdivo has been approved for use against skin, kidney and blood cancers. The business also has a non-cancer pipeline and a dividend yield of 2.7%.