Share tips of the week
MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK financial press.
MoneyWeek's comprehensive guide to the best of this week's share tips from the rest of the UK financial press.
Three to buy
EasyJet
The Mail on Sunday
With Monarch going into administration, Air Berlin also falling by the wayside and Ryanair beset by a scheduling debacle, it is little surprise that shares in this airline have climbed 10% over the last month. If the latest chaos turns passengers off the whole budget-airline sector then easyJet will be in trouble too, but as long as price remains paramount it is well placed to "cash in on its rivals' woes". 1,263p
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Greencore
Shares
The market is overlooking this convenience-foods firm's strength in the fast-growing food-to-go sector. The business is now entering a "period of nourishing returns" and presents a "tasty buying opportunity for growth and income seekers". 184.5p
Hotel Chocolat
Investors Chronicle
This luxury chocolatier is showing solid UK growth and stable margins. The group's ownership of its own cocoa plantations has given it a degree of insulation against some of the cost pressures bearing down on other retailers. The shares might look pricey on 31 times forward earnings, but there is still plenty of room for upgrades down the line. 309p
Three to sell
Intercontinental Hotels
The Sunday Times Investors have been drawn to this firm's dollar earnings US sales make up more than half of turnover and bumper dividends as sterling weakens. Yet there are signs that the group's US hotel revenues are slowing, while the threat of Airbnb looms large. With the shares looking expensive after an outstanding run, "investors should consider whether now is the right time to check out". 4,093p
Reckitt Benckiser
The Sunday Telegraph
Reckitt has become a "£50bn health and hygiene superpower" over the past two decades, but perhaps the firm's "best years could be behind it". The big question is whether it can successfully integrate baby-formula maker Mead Johnson after its $17bn deal in February. Things may come good, but right now Reckitt looks like "a business struggling for stability". 6,833p
Revolution Bars
The Daily Telegraph
This bar chain saw its shares slump following a profits warning in May, but then rebound on expressions of interest from two potential buyers. The group's full-year results are solid, but the share price barely moved as investors focus their attention on Revolution's two potential suitors. Investors should sell now, rather than hanging around in the hope of a higher bid. 211.5p
And the rest
The Daily Telegraph
Greetings-cards maker IG Design has been gaining market share (336.5p).
Avoid troubled outsourcer Carillion, where disappointing results will do little to encourage a buyer anytime soon (50p).
Investors Chronicle
An improving outlook for steel is good news for Vesuvius, which provides specialist ceramics to the metals industry (583p). Pharmaceutical outfit Circassia is well placed to generate big returns from its partnership with AstraZeneca (83p). Meetings-software provider LoopUp has been posting strong sales growth (275p).
Shares
Tobacco firm Imperial Brands is an excellent defensive pick (3,155p).High margins and a global brand mean investors should buy fashion retailer Ted Baker (2,677p). There are questions about the sustainability of the car-loan boom, but motor-finance firm S&U is less exposed than most (2,090p). Allergy specialist Allergy Therapeutics has an interesting pipeline of new drugs (32p).
The Times
Tesco CEO Dave Lewis has done a good job turning the retailer around (188.5p). International healthcare firm BTG may make profitable acquisitions in the US (711.5p). Banknote manufacturer De La Rue is moving into higher-margin areas (666.5p). Plumbing supplier Ferguson has announced a £500m share buyback (5,060p). Sell high-performance components maker Gooch & Housego it's a terrific firm, but the shares are dear (1,405p). Further upside for exhibitions group ITE also looks unlikely (180.5p).
A German view
Krones is on a roll. The family-run German packaging and bottling-machine manufacturer is on track to make sales worth €3.6bn in 2017, almost double 2008's total. A buoyant world economy and the new middle classes in emerging markets, who have more money for consumer goods, are helpful tailwinds. Krones, which recently introduced the world's fastest beer-bottling machine, has just strengthened its presence in storage technology through an Italian acquisition, says WirtschaftsWoche, while it has also expanded its hitherto small US presence with a local takeover. The firm has also just teamed up with Austria's Erema, the world's top PET-recycling specialist. More than 400 million PET bottles reach the market every year, so there will be plenty to do in this sector.
IPO watch
Shares in Irish builder Glenveagh Properties jumped 14% on its first day of trading on the Dublin and London stock exchanges this week. The firm, which raised €550m to fund expansion, was created by combining property assets owned by Oaktree with those of Bridgedale, an established housebuilding firm. The combined business has 1,700 units ready for construction in the Dublin area and will aim to build 1,000 units per year by 2020, says Reuters. Glenveagh becomes the second listed Irish builder after Cairn Homes, which raised €385m in an initial public offering in 2015 and has since seen its shares rise 75%. Ireland had a housing glut in the aftermath of the financial crisis, but is now suffering from a shortage due to the slow recovery in the sector.
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