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
Ediston Property Investment Company
The Mail on Sunday
For all the talk of the rise of online retail, more than 80% of purchases in the UK are still made in physical stores. Edinburgh-based property investor Ediston's £325m portfolio focuses on out-of-town retail parks outside the southeast of England. Retailers like the cheaper rents, while Ediston makes sure that the sites are within easy reach of shoppers. The aim is to grow the portfolio to £500m and an added bonus is that the 5.2% dividend yield is paid out in monthly increments. 111p
Nearly seven million games of tenpin bowling were played at Hollywood Bowl the sector leader in the six months to March this year, a 3.6% year-on-year increase. Management plans to boost revenue with a whole raft of measures, including dynamic pricing of bowling sessions, allowing customers to wear their own shoes during games and cashless amusement arcades. Performance has been "flawless" since the group floated in 2016 and there is more upside to come from this "superb investment". 235p
GSK's consumer healthcare and vaccines businesses are growing fast, while the balance sheet and dividend outlook has become more predictable since the firm bought out Novartis's share in a joint healthcare venture. Bears point to GSK's comparatively weak drugs pipeline, but these concerns are already looking priced in, providing an opportunity to snap up an industry "stalwart" and secure an appealing 5.3% dividend yield. 1,497.25p
Three to sell
The Sunday Times
Retail stalwarts such as M&S and Dixons Carphone are regrouping amid harsh conditions, but this sofa seller is blithely opening more stores. DFS has been picking up assets from failed rivals such as Multiyork and hopes to save money by securing lower rents from landlords. The business now commands a third of the UK upholstery market and the shares have rallied strongly in recent months, but rising debt levels are a concern and a weaker housing market could put a dampener on the home-furnishings sector. Avoid. 230p
The Daily Telegraph
Disruptive technology companies can shake up the most unexpected of markets, and fund managers arestarting to worry that this bakery chain could be next. Fewer visitors to shopping centres and high streets means less passing traffic for convenience food vendors such as Greggs, as suggested by a recent profit warning. The firm's management hopes to shift focus to transport hubs, but its days of heady growth seem to be over, leaving the shares looking too dear at the current price. 1,052p
This catalytic-converter maker has "belatedly jumped" onto the battery-cell bandwagon in case its existing business is rendered obsolete by the rise of the electric car. Excitement about the new technology has boosted the shares, yet there are uncertainties about its commercial viability, underlined by the fact that the price of cobalt a crucial component of the batteries has quadrupled in the last two years. Avoid. 3,508p
...and the rest
Eastern Europe-focused budget airline Wizz Air has secured a UK air operators' licence, providing more certainty ahead of Brexit (3,433p). New car sales may be declining, but shares in car dealership Lookers are unfairly "priced for disaster" (105p). Tanzania isn't the most stable of mining locations, but Shanta Gold enjoys good relations with the country's government just don't bet your life savings (6p).
Expect an increase in value at Urban & Civic as its development of thousands of new houses outside London builds momentum (314p). Risk-averse investors shouldn't wait around for Burberry's long-term plan to reinvent itself amid fierce rivalry in the luxury sector (2,021p). Telford Homes offers an exception to the bearish outlook for London housing, due to its exposure to the build-to-rent sector (456p).
News of its first acquisition in two decades is a sign of rebounding confidence at electrical-goods distributor Electrocomponents (705p). Betting-market deregulation means enhanced prospects for gaming-technology supplier Quixant (447.5p). Shares in document-management group Restore have fallen back ona mixed trading update, butthe firm still has market share to win (510p). Dixons Carphone has been punished after a profit warning, but the "kitchen-sinking" exercise clears the way for better news (192.65p).
The Daily Telegraph
West African goldminer Avesoro Resources could be a speculative hedge against any future economic downturn and the resulting renewed quantitative easing (260p).
A German view
The global market for waste disposal is expected to grow from $320bn to $435bn over the next five years as the world economy expands and emerging-market consumers become richer. That means France's Veolia, which handles 47 million tonnes of waste a year, is enjoying a long-term tailwind. The group also provides drinking water and deals with waste water. Its specialist waste and recycling services are lucrative because there is little competition; one current project is disposing of parts of wind-turbine blades in countries where wind energy is no longer enjoying generous subsidies. A falling euro will boost profits as half the group's sales are made outside Europe. The stock also yields more than 4%.
Law firm Knights is planning an initial public offering (IPO) on the London Stock Exchange this month, which will be the largest law firm flotation so far, says City AM. The listing is expected to value the business at more than £100m, outstripping Gateley, the first English law firm to go public, which was valued at £100m when it floated in 2015. Knights has expanded significantly since the chief executive, David Beech, took the helm in 2011, growing revenue from £8m in 2012 to £34.9m last year, when it entered the list of the UK's top 100 law firms for the first time. Proceeds from the float will go to pay down existing debt, provide working capital and support further acquisitions.