Share tips of the week
MoneyWeek’s comprehensive guide to this week’s share tips.
Three to buy
Barclays
The Daily Telegraph
Barclays has become the first bank to comply with new rules designed to ringfence high-street operations from banking failures, but Moody's spoilt the party, taking the opportunity to cut the bank's debt rating to one level above junk. The downgrade is "not the end of the world" and many in the City reckon that Barclays is undervalued after a favourable settlement with US regulators over mortgage bond mis-selling left the bank free to focus on building capital and returning cash to shareholders. 211.75p
IMImobile
The Mail on Sunday
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This software business was founded in India in 2000. It helps banks, retailers and the NHS to text and email customers, cutting postal costs. The firm is responsible for more than 27 billion messages across multiple platforms and 15 billion automated voice conversations every year. It is the market leader in Britain, has been growing strongly, and may pay a dividend in the next few years. 267p
Miton
Shares
Asset-management giants such as Standard Life Aberdeen are haemorrhaging billions as investors plump for passive index trackers, but this Aim-listed minnow is still "pulling in the punters".
Last year brought £494m of inflows into Miton's specialist funds, suggesting there is still appetite for active management. Tightening monetary policy worldwide should give the art of savvy stock selection greater importance, and you can start with Miton's own shares, which are a bargain at 9.5 times 2019 forecast earnings. 41.75p
Three to sell
Burberry
The Sunday Telegraph
Burberry's share price has seesawed over thepast few years, but investors have high hopes for incoming chief executive Marco Gobbetti's plans to drive the brand even further upmarket. That means propelling Burberry handbags from £1,000 each into the £2,000-a-pop category occupied by the likes of Prada.
The problem is that such turnarounds can take time and the shares may slip at the first sign of turbulence.At 20 times this year's forecast earnings,"the price tag on this luxury good is too high for now". 1,676.5p
Greene King
The Sunday Times
Investors in the pub group have had to swallow a lot of bitter news as its share price halved since December 2015. The living wage and higher business rates mean another £60m hit lies in store this year, while bad weather has increased anxieties about a consumer slowdown. Bulls say that asset sales could turn things around and point to a 6.8% dividend yield, but short sellers know the shares are going cheap for a reason. 474.75p
Rank
Investors Chronicle
This casino and bingo hall operator continues to struggle, with the group's Grosvenor Casinos posting a 9% drop in revenue in the 13 weeks to April and a 2% decline at Mecca Bingo. Management has blamed poor weather and points to the growing digital business, but that isn't enough to make up for the failures and profit expectations have been cut. With a weakening UK consumer outlook, there could be "more bad news". 177p
and the rest
The Daily Telegraph
US-listed NetApp's software helps the growing number of firms opting for "hybrid" data storage systems ($60.04).
Investors Chronicle
IT consultancy group FDM is expanding rapidly and offers a decent 3.4% dividend yield (1,006p). Equipment hire firm Vp has bucked negative market expectations since the Brexit vote and shares trade at a discount (860p). Robust demand for construction aggregates should ensure continued "steady organic growth" at Breedon (79.25p). Investors with risk appetite may want to gain exposure to Time Out's fast-growing Time Out Market business, which hosts restaurants, street food and shops in big cities (130p).
The Mail on Sunday
Existing shareholders may want to bank some profit, but should mostly hold specialist ingredients group Treatt, whose sugar substitutes stand to gain from Britain's new sugar tax (412p).
Shares
Meat-packing business Hilton Food offers "tasty growth potential" (800p). Steel specialist Billington is pursuing new opportunities overseas to hedge against UK uncertainty (260.5p). Life-assurance fund consolidator Phoenix "could be the best income stock you've never heard of" (759.5p).
The Times
Clothing retailer Superdry is "fast on the way to becoming a global brand" and increasing dividend payouts seem likely (1,565p). Shares in oil and gas explorer Faroe Petroleum have leapt on a big gas find, while recent investment from a Norwegian energy company confirms the group's long-term prospects (117.5p).
A German view
Warren Buffett's investment vehicle Berkshire Hathaway hogs the headlines, so some may not have heard of Danaher, another conglomerate that has gained a foothold in several industries, notes WirtschaftsWoche. Today it focuses on healthcare and medical research. It has acquired Integrated DNA Technologies, a biotech specialising in genomics, while another key holding is Nobel Biocare, a maker of dental implants.
Danaher finds leading companies with solid balance sheets in promising industries and makes them more efficient and profitable. In the past decade, earnings have grown faster than sales. The shares have risen by 1,300% in the past 20 years.
IPO watch
Britain's largest nightclub operator, Deltic, is reconsidering an initial public offering (IPO), says The Times. The firm, which has more than 50 venues including Pryzm and Atik, put plans for an IPO on ice last year, blaming trading conditions, refurbishment plans and Brexit. In October, Deltic made headlines for its failed attempt to merge with Revolution Bars, before buying a 3% stake. Deltic is now keen to convince investors that clubs have a future, despite the sector shrinking in recent years. In the year to February 2017, Deltic made a £1.48m pre-tax loss, although sales rose by 1.4% to £102.2m.
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