Share tips of the week
MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK press.
Three to buy
Hunting:Investors ChronicleThis oil equipment and services provider has not been spared the effects of the oil-price slump, but things are looking up. With oil-cartel Opec keeping a lid on supplies and US well completions on the up, the business is in "a strong position to grow earnings and cash flows over the medium term". It's a speculative buy and, given it's likely to start paying a dividend again in 2018, has recovery potential. 539.5p
Walker Greenbank:SharesA "savage" 45% share-price slump since a profit warning on 15 November means this luxury interior-furnishings maker is going cheap. Weak UK brand sales will see profits come in 10% lower than forecast, but that doesn't justify the fall. The market is ignoring the group's overseas growth prospects. A 3.75% dividend yield also provides downside protection while we wait for the shares to pick back up. 120p
Warpaint:The Mail on SundayThis cosmetics firm only floated last year, but its management has more than 40 years' experience and launched the W7 brand in 2002. The group has since developed a reputation for high-quality cosmetics that retail at lower prices than those of rivals. Warpaint has remained profitable and has never taken on debt. "There is a decent dividend policy, too." 222.5p
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Three to sell
Croda:The Sunday TelegraphThis FTSE 100 chemicals business supplies beauty brands such as L'Oral and Este Lauder with the "active ingredients" in their products. It is a "true northern powerhouse", with four manufacturing sites in the UK and a £27m plan to expand its Hull plant. The shares are on a strong run, but with them trading on 24 times earnings and the business valued at £6bn, they are best avoided. 4,251p
Dignity:The Sunday TimesThe old adage about the certainty of death and taxes has served this funeral director well. The average cost of a funeral has more than doubled since Dignity listed in 2004 to £4,078. But rivals such as price-comparison site Funeralbooker are snapping at the firm's heels. It must now choose whether to stick with a premium pricing model or discount to preserve market share. 1,621p
Greene King:The Daily TelegraphThe Telegraph tipped this pub chain in February thinking it was through the worst, but "it now finds itself in a perfect storm". Costs are rising just as customers are tightening their belts.It could raise prices, but fierce competition means it has "no pricing power". The dividend looks safe for now, so income investors can hold, but growth investors should cut their losses. 524p
And the rest
The Daily Telegraph:Defence contractor Babcock's eviction from the FTSE 100 represents a buying opportunity (687p). RWS Holdings is the leader in translating patents for global firms, and it's inheritance-tax-free (422p).
Investors Chronicle:LondonMetric Property offers exposure to the fast-growing urban logistics sector (180.5p). Software business WANdisco is partnering with tech giants and revenues are growing fast (568p).
Shares:The launch of a new business telecoms platform could spark a re-rating at Aim-listed Gamma Communications (601.5p). A new leadership team at IT outsourcer Redcentric has analysts tipping "up to 45% share-price upside" in the year ahead (85.25p). Cineworld's £2.7bn acquisition of US peer Regal looks pricy, but shareholders could find value in a forthcoming rights issue (531p). Just Eat will be promoted to the FTSE 100 this month (801.5p). An ageing demographic makes social-care services provider Mears a pick for the long term (383.5p).
The Times:It's "all go" in the wholesale and convenience sector right now, and McColl's could be a beneficiary (276p). Insurer Legal & General has enjoyed "great momentum" this year and its bet on the annuities market should pay off (260p). Ukrainian iron-pellet producer Ferrexpo is well placed in the steel market (247p). GlaxoSmithKline, Marston's, and Dixons Carphone all offer rare 6%+ dividend yields at the moment (1,279p; 118.25p; 161p).
IPO watch
The largest Italian marketplace in the world, comprising various restaurants, food and beverage counters, as well as a cookery school, has announced plans to list on the Milan Stock Exchange next year. Currently expanding in the US, Eataly aims to open sites in Stockholm, Paris, Toronto, Verona and London in the next few years. Meanwhile, the firm is on target to report sales of €470m in 2017, an increase from €380m a year earlier. Earnings before interest, tax, depreciation and amortisation are estimated to be around €22m this year. Eataly was founded in 2004 by entrepreneur Oscar Farinetti, who still owns the majority of the company. Tamburi, a Milan-based family-office-turned-private-equity investor, bought a fifth of the firm in 2014 for €100m.
A German view
Manufacturers of picks and shovels are often good plays on commodity upswings. Similarly, a producer of cardboard boxes could prove a lucrative means of tapping into the e-commerce boom and the buoyant global grocery market. Enter Ireland's Smurfit Kappa, Europe's biggest manufacturer of paper-based packaging. In ten years it has tripled its French sales of boxes for packaging wine. This growth comes on top of recurrent business from grocery giants such as Kellogg's and Nestl, while in the household goods and industrial sectors, major customers include Henkel and Procter & Gamble, as WirtschaftsWoche points out. Smurfit is expected to achieve sales of €8.4bn this year, while analysts are pencilling in profit growth of 10% in 2018. The London-listed stock yields almost 3%.
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