Share tips of the week

Three to buy

Merlin Entertainments

The Sunday Telegraph

Stockmarket life has been something of a roller-coaster for the Legoland and Madame Tussauds owner in the past year, with the share price touching an all-time high last June only to collapse after a profit warning in October. However, this summer should bring happier trading, boosted by a good weather forecast for the coming months. On a longer view, the firm has few challengers and “demographic trends are on its side”. 379.5p

John Menzies

Investors Chronicle

John Menzies is made up of two divisions: a newspaper and magazine distribution arm and an aviation services business that offers ground handling and refuelling. Efforts to sell the distribution unit have stalled, hitting the share price, yet the difficulties here obscure opportunities in aviation, which now accounts for 70% of group profits and is growing fast. Meanwhile, the shares look cheap and offer a 4% dividend yield. 626p

Speedy Hire

The Sunday Times

Three years ago, this Liverpool-based tool-hire business was on the ropes after the discovery of accounting irregularities in its Middle East operations. Two chief executives were forced out, but new boss Russell Down has been turning things around, paring back the number of lines offered to reduce complexity, and cutting unnecessary costs with an accountant’s zeal. Asset utilisation is up, management is more responsive to customers, and debt has fallen. Moreover, big government infrastructure projects ensure a pipeline of business regardless of the wider economic picture. 63p


Three to buy

Inmarsat

Shares

Shares in this satellite network operator have rallied by 25% on news of a preliminary takeover approach from US-listed peer Echostar. Management of the firm – which makes most of its money providing shipping communications – has rejected the offer, but a bidding war between rivals could now begin. Investors should see the strengthened share price as an opportunity to “manage an exit” from the business after a difficult few years caused by challenging conditions in maritime markets. 525p

Revolution Bars Group

The Times

Investors in this cocktails-to-food business must be pondering the wisdom of rejecting Stonegate Pub Company’s 203p-per-share offer last October. The share price has since remained below that level and now a profit warning has made matters even worse. The group has drifted through the last few months without a CEO, though new boss Rob Pitcher will take the reins imminently. He inherits a business with strong brands and good bar locations, but nothing is guaranteed in a tough trading environment. Avoid for now. 145p

SimplyBiz

Shares

This regulatory compliance and business support-services provider is starting to gain traction on the stockmarket after listing in April this year. It offers high levels of recurring revenue in a market that is growing because of an ever-increasing regulatory burden. However, SimplyBiz faces competition from subsidiaries of giants such as Aviva and on 17 times forecast earnings the valuation looks too rich at the current price. 179p


…and the rest

The Daily Telegraph

It’s time to take profits in “nearly new” car dealership Motorpoint as the outlook darkens for big-ticket consumer stocks (246p).

Investors Chronicle

Great cash generation and returns are on offer at IT firm Computacenter, but the shares are rated lower than those of its peers (1,376p). Regeneration group Harworth is sitting on a huge land bank amid ever-rising demand for new houses and warehouses (124p). Alternative lender Charter Court Financial Services is impressing investors with its growing loan book (317.5p).

Shares

Retailer WH Smith is growing its travel arm and is “far healthier” than many investors appreciate (2,020p). Aerospace and defence engineer Meggitt benefits from rising US military spending and a growing civil aviation market (501.25p). Keep buying Ramsdens as it diversifies from pawnbroking into activities such as foreign-currency exchange (199.5p). It is tempting to take profits at enterprise innovation and services provider Sopheon,but it has a brighter future (880p). Analysts see 25% upside in the next year for fast-fashion group Quiz (170.25p).

The Times

Shares in shower specialist Norcros look undervalued amid strong demand from housebuilders (214p). Retail industry shares have taken a battering this year, creating an opportunity in Ted Baker (2,346p). Shares in automotive engineer Autins Group have crashed due to lower demand from key client Jaguar Land Rover and a murkier outlook for the wider industry (53p).


A Swedish view

The share price of hardware store Clas Ohlson has more than halved from its peak last August, but that’s an overreaction, says Swedish business magazine Affärsvärlden. The firm has shut down stores in the UK and ended its franchising business in the Middle East. Under new chief executive Lotta Lyrå, it is focusing on Scandinavia – the market for “home products” is worth 90 billion Swedish kronor, and so far Clas Ohlson only has a 9% share of the sector. It is also improving its e-commerce offering. If the firm achieves its targets of 5% organic growth per year and a 7% operating margin, the share price could rise by more than 60% over the next five years (assuming a price/earnings ratio of 14).


IPO watch

Cryptomining service Argo Blockchain wants to become the first cryptocurrency group to list on the London Stock Exchange. It aims to raise £20m, to give the company an overall value of £40m. Argo wants to “democratise” the cryptomining process by which new virtual coins are created, by renting out its specialist computing capacity for $25 a month. Users will be able to mine Bitcoin Gold, Ethereum, Ethereum Classic and Zcash. Argo currently has a data centre in Quebec, Canada, and plans to establish others in places such as Iceland and China, which have cheap sources of renewable power and chillier climates. In January, Argo raised $2.5m from private investors.