Share tips of the week
MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK's financial press.
MoneyWeek's comprehensive guide to this week's share tips from the rest of the UK's financial press.
Three to buy
CVS Group
Investors Chronicle
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The veterinary group has grown at an annual rate of 27% since 2007, helped by a steady stream of acquisitions. There is plenty of room for more: 77% of the UK veterinary market consists of independent practices. This is a cash-generative business that more than justifies its high rating. 1,166p
DekelOil
The Mail on Sunday
Shares in the palm-oil producer have yo-yoed, but this year has started on a much brighter note. Palm oil has a poor ethical reputation, but Dekel works with its producers in West Africa to provide a decent standard of living. "Adventurous punters should pick up a few shares." 12.625p
GCP Student Living
Shares
This real estate investment trust (Reit) owns more than 2,000 student rooms, mostly in London, and has delivered an annualised return of 16.3% since listing in 2013. Brexit may dampen demand, but management is confident that student numbers from outside the European Union will pick up after 2019. Student accommodation is a relatively stable market and GCP is in a "sweet spot". 150p
Three to sell
CYBG
The Sunday Telegraph
Shares in Clydesdale and Yorkshire Banking Group have risen by more than half since it split last year from National Australia Bank. Yet it's "always been stuck in the middle of the sector", lacking the scale of bigger players but with too many branches and facing fines for PPI mis-selling that don't afflict many challenger banks. Don't expect recent share-price momentum to continue. 283p
JD Sports
The Sunday Times
Sports Direct tycoonMike Ashley once vowed to "smash" his rivals, but JD Sports has prospered and is on the cusp of entering the FTSE 100, with shares up 400% in three years. Boss Peter Cowgill has expanded across Europe and is now moving into Malaysia and Australia, declaring that "JD is about to conquer the world". But "we all know what follows hubris". Avoid. 390.5p
Topps Tiles
The Times
Topps is the market leader with about a third of the UK's domestic tile trade and is opening new stores. It enjoyed an unusually strong year's trading in 2016, but it could now be a victim of its own success. A trading update shows a 4.1% decline in like-for-like sales for the second quarter and those "strong comparatives" from previous years could start to weigh the shares down. 89.75p
And the rest
The Daily Telegraph
Scepticism about drugs firm Shire after a big acquisition last year has left the shares of this cash-generative business "in the bargain basement" (4,752p).
Investors Chronicle
Shares in private-client fund manager Rathbone Brothers trade at a discount to peers (2,360p). Pig prices are on the rise, so expect pork processor Cranswick to enjoy "another banger year" (2,557p). Higher energy prices are a boon for Inspired Energy, which helps companies to save money on their power bills (16p).
Shares
A debt renegotiation at the fibre network operator CityFibre Infrastructure should allow it to fund its growth plans (51p). A court ruling in favour of animal genetics specialist Genus opens the way to the US market (1,761p). The acquisition of a German broadcast media business last year has created opportunities for the IT services firm SciSys (110.5p). Saga boasts a strong brand and a loyal customer base (201.7p). The digital marketing agency Be Heard has significant potential (3.6p).
The Times
Wood Group's move to purchase fellow oil-services firm Amec Foster Wheeler looks like a steal if the oil price doesn't fall (781.5p). Learning Technologies Group, which provides online training, is a long-term buy (45.5p). The palm-oil producer MP Evans is highly speculative, but a takeover suitor is hovering (750p). Strong growth in oncology and blood clot products should boost sales for specialist pharmaceuticals company BTG (605p).
An American view
Investors have grown cold on solar stocks in recent years, as many of them are highly indebted and have been battered by price wars, says Andrew Bary in Barron's. But Israel's Nasdaq-listed SolarEdge Technologies, expected to make sales worth $478m this year, has been unfairly punished in the general sell off. It makes a "category-killer product for a secular growth industry", as one investor puts it optimisers, designed to strengthen the power output of solar panels, and inverters, which transform the direct current from panels into alternating current that households and businesses can use. Moreover, unlike many other companies in the industry, SolarEdge is profitable, debt-free and holds investments worth nearly $5 a share, or just under a third of the current share price.
IPO watch
ADES, a Dubai-based oil and gas drilling and production services provider, is to float on the London Stock Exchange next month, hoping to raise $170m. The company has operations in Egypt, Algeria and Saudi Arabia, employing 1,300 staff and operating two onshore drilling rigs and a fleet of jack-up offshore drilling rigs. It specialises in acquiring legacy shallow-water offshore assets at "very attractive prices" in markets with low break-even costs but "significant barriers to entry". It says it has a low-cost business model that delivers revenues that are "relatively resilient", providing "a degree of insulation from oil-market cycles". The proceeds of the IPO will help to scale up existing operations and fund new ones in the Persian Gulf.
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