Share tips of the week
MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial press.
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
Residential Secure Income
The Mail on Sunday
This residential trust, which provides funding to housing associations that offer subsidised rents and shared-ownership schemes, is scheduled to float later this month. The trust's contracts are with the associations rather than the tenants, which provides a degree of security. An opportunity to help to boost the supply of affordable houses "and earn decent returns at the same time". 100p
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SIG
The Sunday Times
The building products supplier showed its chief executive the door last November after dire trading resulted in a profit warning. Yet the shares have risen by 70% since then. Brexit means this is not an ideal time to be restructuring, but new boss Meinie Oldersma has form he has turned around 13 distributors before and there are several potential buyers circling. 148.5p
Segro
The Sunday Telegraph
Europe's largest listed industrial and logistics real-estate investment trust (Reit) has seen its shares double in four years, driven by demand from ecommerce. Chief executive David Sleath is doubling down on expansion and has spare cash for further acquisitions. Segro's shares are trading at a slight premium to peers, but a reliable and growing dividend yield makes them a buy. 489.25p
Three to sell
Domino's Pizza
Shares
Pizza chain Domino's is facing concerns about its prospects, with weakening consumer confidence and rising costs. These pressures could weigh on franchisees' like-for-like sales. Aggressive discounting at rival Pizza Hut has added to the challenge, and competitors such as Deliveroo and UberEATS boast superior technology. Expect the shares to "remain weak for some time". 286.5p
Greene King
The Times
This pub chain is well placed if the economy weakens. Its £774m purchase of Spirit Pubs in 2015 looks like an even better deal now, giving a route to growth when few others are available, while a dividend yield of almost 5% should support the shares. But "even on a forward earnings multiple of about ten, it seems the wrong time to be investing in UK consumer-facing companies". 688.5p
Stagecoach
Investors Chronicle
Shares in the transport group hit a seven-year low as underperformance at its rail franchise wiped out most of its pre-tax profits. It has a 90% stake in the Virgin Trains East Coast franchise, but contract provisions to upgrade rolling stock have delivered a £129m blow. The shares look cheap on eight times forward earnings, but stay away until there are signs of a turnaround. 184p
And the rest
The Daily Telegraph
Tighter supply of uranium should boost shares in Geiger Counter, which invests in the metal (18.5p). Utility Centrica has a potential 5.8% dividend yield (209p). Intellectual property firm Murgitroyd is on 13.5 times forecast earnings (392.5p).
Investors Chronicle
Budget airline Wizz Air is well placed for the long term (2,318p). Watkin Jones uses a low-risk model to build rooms for students (195.25p). The investment case for media firm Ascential remains solid (327.5p). Document-management firm Restore may sound dull, but its performance is anything but (430p).
Shares
Small-cap investment specialist Gresham House Strategic "won't stay cheap for long" (910p). Eddie Stobart Logistics is undervalued (158.5p). Cooking-oil filtration firm Filta should achieve its ambitious growth targets (117p). Corporate-tax software specialist Tax Systems offers a "combination of security and growth" (74.5p). Fantasy-models maker Games Workshop is a resilient pick in a retail downturn (1,200p).
The Times
Packaging firm DS Smith has cut its downside risks and the core business is performing well (473.25p). Drone-maker Cohort is a "long-term play on defence spending" (425.5p). Distribution and outsourcing firm Bunzl offers long-term value (2,343p). Construction services firm Kier Group yields 5.3% (1,240p). Oil services firm Petrofac could rebound despite a corruption probe (417.5p).
A German view
Natural gas is plentiful and burns more cleanly than other fossil fuels, which should underpin long-term demand. And liquefied natural gas (LNG) technology is making it easier to ship gas to where it's needed: the gas is cooled to -162C, which turns it into liquid, and then loaded onto ships. The International Energy Agency expects LNG to comprise 50% of the gas market in 20 years' time, says WirtchaftsWoche, which should be good for Spain's Gas Natural Fenosa. The firm is a key player in LNG with eight tankers and part-owns two liquefaction and three regasification plants. The group also distributes gas to the industrial and domestic markets. It boasts 23 million customers in 30 countries. Last year the firm turned over €23bn and made operating profits of almost €5bn. The stock yields 4.6%.
IPO watch
When Polish mobile-phone operator Play floats on the Warsaw Stock Exchange this month it will become Europe's biggest telecoms initial public offering since Telefnica Deutschland floated in 2012, says James Shotter in the Financial Times. The firm hopes to raise £1.1bn by placing up to 121.6 million shares at 44 zlotys (€9.1) a share, valuing it at 11.2bn zlotys (£2.3bn). The proceeds will be used to pay off debt. Play operates Poland's second-biggest mobile-phone network with more than 14.3 million subscribers and grew its market share from 4.6% of reported subscribers at the end of 2008 to 27.6% in March 2017.
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