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 Sunday Times
It has been a turbulent year for the British biotech sector, but the share price of this company specialising in cell and gene therapies has nearly doubled. A raft of licensing deals have spread risk and opened the way to profitable royalty payments down the line. The firm's lentivector DNA treatment will give it a slice of a market that is forecast to be worth $10bn in a few years' time. While the company is still a loss-making business, those losses are shrinking. Recent performance shows big potential rewards are on offer. 961.75p
Shares in this multi-brand car distributor have been swept up in negative sentiment towards the UK automotive retail sector, even though this is balanced by stronger performance in emerging markets. A prospective price-earnings (p/e) ratio of 11.3 looks "grudging" for a business that is diversified across five continents and multiple retail sub-sectors, and whose long-established partnerships with high-end car brands ensure a "wide economic moat" against competition. Investors should buy into the stock ahead of a second half that could prove a "re-rating catalyst". 738.5p
Few will be more delighted than Segro that the cabinet has approved plans for a third runway at Heathrow airport. The business owns giant warehouses and logistics hubs catering to delivery companies and retailers. Segro has more than five million square feet of such space at London airports, including the majority of air-side cargo capacity at Heathrow. The third runway will surely boost demand, while new supply is limited by greenbelt restrictions. 667.25p
Three to sell
The Sunday Telegraph
Greeted with great fanfare as "Europe's largest technology flotation of theyear" in May, it's worth wondering whether this antivirus software provider needs to be put into quarantine. Cybersecurity is a growing field, but it's not clear whether the group's "freemium" model can be translated into top-line growth from paying customers. More concerning is the "information vacuum" as analysts hold fire until interim figures in August. The City doesn't seem to understand this business and investors should steer clear until it does. 215.5p
Invest in shares that have been overlooked, says Joe Bauernfreund of the British Empire Trust. This Tokyo-listed investment company that focuses on small tech firms is a good example. Bauernfreund bought in when it was trading on a sizeable discount to net asset value (NAV) in 2016. That changed when the firm moved to invest in blockchain businesses, generating more investor interest and sending the share price rocketing. "That's the time for us to take money off the table." 4,515
Most City analysts rate this commodities mining and trading group as a buy, citing its 6.3% forward dividend yield. But note that investors who bought in at Glencore's 2011 flotation are nursing a 13% loss, including reinvested dividends. The firm's "contrarian strategic nous" and "appetite for political risk" were once strengths, but with political winds blowing foul everywhere, that approach isn't looking so clever now. 384.75p
...and the rest
The Daily Telegraph
Boohoo.com, PTSG, Majestic Wines, Nichols, Anpario, First Derivatives and Manx Telecom are good Aim stocks offering inheritance taxbreaks (211.5p; 171.25p; 458p; 1,543p; 494p; 4,390p; 180p). Commercial property giant Land Securities is trading at a 33% discount to the value of its assets (935p).
Institutions want to take the uncertainty out of pension payments, boosting life insurer Legal & General (272.75p). Tough Chinese waste-import rules have pummelled recycling shares, but Renewi is well placed to take advantage (82p). The gaming market grows by 8% annually, lifting developers such as Sumo Group (141p).
The Mail on Sunday
Adventurous investors hoping to buy into the electric-car boom should take look at lithium miner Savannah Resources (8.25p).
The market has little love for general insurance companies, but Hastings is one firm committed to profitability over growth based on thin margins, and the shares look a "bargain" (260.5p). A positive update from fryers-to-drains cleaning specialist Filta supports the belief that it can deliver "superior value" over the long term (215p). Some investors have been taking profits after a recent share-price run at Telford Homes, but Shares thinks it is worth hanging on (466p). Video-games developer Codemasters had a strong start on the stockmarket amidst an industry boom (270p).
Shares in packaging business DS Smith are at a record high, but they "still have room to grow" (572p).
An American view
CK Hutchison Holdings, which owns the world's largest port business, telecoms network 3 Group, drugstore chains, and power and water assets, has found itself out of favour. Its 3 Group European wireless unit, which generates 25% of its profits, is exposed to two highly competitive markets, Britain and Italy. The formerly high-growth Watson's drugstore business in China has been hit by internet competition. There's also uncertainty about the firm's direction under new chairman Victor Li. Yet CK Hutchison should reach mid- to high-single-digit earnings growth in the next three years. Trading on nine times projected 2018 earnings, it looks like a rare bargain, says Barron's.
Aurum Holdings, Britain's biggest watch and jewellery group, is planning an initial public offering (IPO) in Zurich or London next year, says Sky News. The plans, led by its private-equity owner Apollo Global Management, are reportedly at an early stage, and could result in takeover interest only six months after a previous round of talks ended. Aurum, which owns the Goldsmiths and Watches of Switzerland chains as well as Mappin & Webb, could now be worth more than £600m, according to analysts. The firm has benefited from a successful expansion into the US following last year's acquisition of Mayors Jewelers for $105m. In April, Aurum raised $265m through a high-yield bond issue.