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 pages.
MoneyWeek's comprehensive guide to the best of this week's share tips from the rest of the UK's financial pages.
THREE TO BUY
The Mail on Sunday
Dividend payouts at this insurer are increasing atone of the fastest rates in the FTSE 100, backed up by strong sales and profits growth. The stock now yields over 5%. A number of modest acquisitions and a ten-year deal to provide insurance products to HSBC's customers promise a strong pipeline of new business. The shares have slipped since January now's the time to buy in.486.5p
Heightening market volatility and an equity sell-off are timely reminders of the need for high-quality, cash-generative growth stocks in your portfolio. This meat products supplier has "fattened up" its revenues impressively over the past decade, with the latest trading update showing a strong performance over Christmas. The firm is still snapping up market share and boasts an unbroken track record of dividend growth stretching back to 1990.2,932p
The Sunday Times
This FTSE 100 maker of catalysts for car exhausts has not stood idly by as the VW emissions scandal and regulators' plans to phase out internal combustion engines make its core market "wilt". It has invested in lithium-ion battery technology. Investors fret that it is being left behind by rivals. Yet the combustion engine will still be with us for decades and winning just 10% of the new battery market would create a subdivision worth £600m. Buy for "a foot in both camps".3,110p
THREE TO SELL
The Daily Telegraph
The Telegraph had hoped that this specialist distributor would turn things around with a planned sale of its books division and a cost-cutting programme. Unfortunately, the books sale has fallen through and a turnaround at the parcels business is sluggish. Income seekers may want to hold on for the 13.4% prospective dividend yield. But with operating profit set to drop for the third straight year, dividend cover is getting tighter.63p
The collapse of Carillion has made investors sceptical about outsourcers. Some might see this as an opportunity to snap up Interserve, given it is trading at just three times forecast earnings, but it is a "dubious bargain". It could still deliver nasty surprises, and is one of the UK's most shorted companies. Others are querying the reliability of the group's headline profit numbers.81p
The Sunday Telegraph
This little-known engineering firm works in metrology, the science of measurement, with applications for everything from wind turbines to microscopes, and for brain surgery and dentistry. Its innovations have "won a worldwide audience". The shares fell in January on news that long-serving CEO David McMurtry is stepping down, yet they still trade at a premium to peers. Avoid until the handover of boardroom power is complete.4,656p
AND THE REST
The Daily Telegraph
Data-firmRelxhas come a long way, but there is more growth to come(1,511.5p). Superb full-year results atBPand a 6%-plus dividend yield make it a buy(481.1p). Market turmoil has created opportunities to buy upRWS,Rentokil,Imperial BrandsandSainsbury's(386p; 284.25p; 2,732.5p; 237.5p).
Urban & Civichas become adept at "driving a horse and cart through the planning process" before selling the land(310p). Shares have dipped at communications groupMaintel, but it remains cash-generative(650p). Last year's failed Kraft Heinz takeover bid has forced soul-searching atUnilever, which may focus minds on shareholder value(3,977p).
The rise of internet-connected cars and 5G technology create opportunities for electronics specialistLaird(118.75p). Furniture sellers have issued profit warnings, butScSis a resilient player(212.25p).
Lloyds Banking Group,Land SecuritiesandFresnillooffer "portfolio ballast in difficult markets"(67p; 937.5p; 1,285p). The humble cardboard box is a surprise winner in the internet age and packaging manufacturerSmurfit Kappais raising its dividend(2,444p).The slow demise of the amateur landlord is good news for professional property outfitGrainger(277.25p). Shares in Lloyd's of London specialist insurerBeazleyhave jumped after very encouraging results(560.5p).
A German view
Germany's PNE, which has been a pioneer in onshore and offshore wind farms for 25 years, is going global. It has hitherto focused on France and Germany. But last month it won a wind-farm auction in Turkey, thus bolstering its presence in emerging markets, where the renewable-energy sector is growing more rapidly than in industrialised countries, says WirtschaftsWoche. It recently sold off some of its old windfarms to invest in new ones and to finance its diversification into other renewable-energy businesses, including photovoltaic systems and biogas. This promising green energy play yields 2.4%.
After raising only £30m of the desired £50m, property search portal OnTheMarket had a poor stockmarket debut last week. Its shares were issued on Aim at 165p, but ended their first trading day down 9%. Figures from research group Edison also show the firm is forecast to rack up heavy losses over the next two years before achieving profitability in the financial year to January 2021, says Shares. OnTheMarket was set up in 2015 to challenge the market duopoly of Rightmove and Zoopla as an alternative route to market, offering estate agents access to potential house buyers at a lower cost.