Share tips of the week
MoneyWeek’s comprehensive guide to the best of the week’s share tips from the rest of the UK's financial press.
MoneyWeek's comprehensive guide to the best of theweek's share tips from the rest of the UK's financial press.
Three to buy
Capital & Regional
The Times
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The shopping-centre owner has seen its share price dip in recent months on wariness about prospects for the high street, but the latest trading update gave little reason for alarm. The group's retail tenants tend towards the value end of the spectrum so will be less affected in a downturn, whilst Capital's "buy and improve" strategy has proven "highly successful". The forward dividend yield of 6.6% is "as good as it gets". 55.25p
EasyJet
The Daily Telegraph
Shares in the low-cost airline have made up much of the ground lost after the Brexit vote, but they are still cheap. It has the potential to grow further by winning market share from the likes of British Airways, whose recent cuts to free food and drink have further narrowed the gap between "quality" and budget airlines. 1,416p
Just Eat
The Sunday Telegraph
Online takeaway group Just Eat now connects 71,000 food outlets with 18.2 million users in 12 countries. The shares trade on 38 times forecast earnings, but the takeaway boom is "far from over" and the business is sitting on a wealth of valuable data gleaned from its online platform. "Just Eat remains a rich but tasty morsel." 690p
Three to sell
Debenhams
The Sunday Times
The high street is a "shadow of its pre-recession self" as more and more retail business moves online. Debenhams is tied into its 175 existing stores by long leases, leaving it with few options even amid signs of Brexit-related belt tightening by consumers. Management has plans to attract new customers by adding nail bars and food outlets to stores, but it may not be enough. Avoid. 42.75p
Gocompare.com
Shares
The comparison site has enjoyed a strong start to life as a public company since being spun out of insurer Esure last year.A first-half update showing robust margins has driven the shares to a new high. But Gocompare is highly focused on the competitive insurance market. With the shares up 77% in eight months, it would be wise to book some profit before the momentum runs out. 110p
Pearson
Investors Chronicle
The educational publisher has struggled as universities move away from printed text books. A full-year loss of £2.56bn left the balance sheet needing a boost, but the $1bn sale of a 22% stake in Penguin Random House to German media giant Bertelsmann saw the shares fall nearly 7%, amid scepticism about the sustainability of a dividend propped up by asset sales. Sell. 651.5p
And the rest
The Daily Telegraph
The Phoenix Spree Deutschland investment trust offers exposure to German property (290p). A dividend hike at Invesco Income Growth makes it a buy for income-seekers (295.5p).
Investors Chronicle
The market is yet to catch up with the flow of good news from uranium miner Berkeley Energia (45p). Shares in digital-focused Matomy Media are up 15% after a strong trading update (111p). Payments technology group Eckoh offers exposure to structural growth in e-commerce (47p). Shopping-centre owner NewRiver Reit yields more than 6% (349p).
Shares
Engineering services group Nexus Infrastructure will benefit from a resilient housebuilding market (191.5p). Share-price weakness at oil producer Cairn Energy is a buying opportunity (168p). Administration specialist Equiniti boasts "an enviable client list" (257.5p). A major US deal has boosted the growth potential of food-to-go forecourt operator Applegreen (460p).
The Times
Electronic-trading specialist Nex Group could see further share-price gains if a takeover bid appears (647.5p). Equiniti's £176m purchase of a US share registration business looks a good move (267p). GCP Infrastructure Investments is one of the safer investments around and yields an attractive 6% (126p). Student accommodation provider Unite will only see its market grow in the years ahead (649.5p).
A German view
France's economy is improving, and if President Emmanuel Macron's structural reforms work out, that will only continue. One way to bet on a French revival is to invest in a solid company with its fingers in many pies. Bouygues is a conglomerate whose interests range from construction (infrastructure such as train tracks and bridges) and property development, to mobile telephony and television. The domestic market accounts for 60% of sales. Property development is a key area: French orders rose by 6% in the first quarter, three times faster than international ones, notes WirtschaftsWoche. Total orders are at a record high. The mobile business is gaining subscribers and the TV arm is expanding market share. Bouygues is set to boost its bottom line by 10% to €800m this year. The stock yields 4.2%.
IPO watch
Swiss metering company Landis+Gyr has announced plans for a stockmarket listing which would value it at up to CHF2.4bn ($2.49bn). It wants to break free from crisis-hit Japanese giant Toshiba, which owns a 60% stake in the company. Last week, the firm set a price range of between CHF70 and CHF82 per share, and said that the IPO would take place sometime in the third quarter of 2017. Landis+Gyr provides meters for both industry and residential properties, and expects to profit as power utilities increasingly switch to "smart" metering, which allows commands and messages to be sent to and from the utility, thus enabling more efficient management of energy supply and demand. The group made net revenues of $1.66bn last year.
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