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
It has been over two decades since the Harry Potter series emerged, and his fans seems as enthusiastic as ever. The magical franchise continues to generate extraordinary amounts of cash for publisher Bloomsbury, which supports the group’s healthy dividend growth. In addition to this reliable income stream, Bloomsbury’s investments in academic titles and cook books offer growth potential. The shares have had a good run so far this year, but still look reasonable value. 240p
The Mail on Sunday
The start of the Tour de France will have more than a few cycling enthusiasts reviewing their gears, much to the relief of Halfords. The cycling specialist had a dismal winter and was also hit by a weak pound, with full-year results sparking an “investor rout” in May. Yet investments in stores and improved customer service should bear fruit, and online sales are growing. Some investors are still hesitant, but the brave may spy an early opportunity to “break away from the peloton”. 353p
The Sunday Times
This fast-fashion brand is a savvy promoter, signing up reality TV stars with large followings on social media. Quiz’s large store estate is a concern at a time of high-street woe, but leases are short. More flexibility comes from the fact that the firm makes 45% of its clothes in British factories, ensuring lead times as short as two weeks and minimising margin-destroying unsold inventory. The stock is a solid investment, which is also trading at a big discount to rivals Boohoo.com and Asos on a price-to-earnings basis. 187p
Three to sell
Business telecoms firm Daisy has called off its acquisition of TalkTalk’s direct business unit after taking a close look at it. Cash-strapped TalkTalk had hoped to raise £175m from the sale and only a £560,000 share purchase by founder Charles Dunstone helped to stem share-price losses following the news of Daisy’s loss of interest. The debt position is now looking increasingly fragile and it is only a matter of time before “hugely optimistic” forecasts are cut, triggering another share-price rout. 105p
This technology blue-chip’s shares are up 50% in the last 12 months, but it risks being outclassed by competitors. The semiconductor firm’s rivals are making products with 10nm (nanometre) technology, while Intel is stuck with 14nm. That leaves Intel behind the pack in a key technology for the first time in decades, and turbulence in the boardroom militates against a confident response. In a time of rising interest rates investors need to avoid firms that can’t serve up decent growth. Nasdaq: $51
The dust at this advertising and PR behemoth has now settled following the acrimonious departure of former CEO Martin Sorrell. The shares are trading above previous lows, but they could disappoint again because an incoming chief executive has every incentive to rebase the dividend. Major clients are scaling back advertising expenditure. The identity of the new boss has yet to be decided, but whoever it is, they will be taking over a business where the risks “now look weighted to the downside”. 1,173p
…and the rest
The Daily Telegraph
Italy doesn’t offer an easy ride, but bank Intesa Sanpaolo is very well capitalised and the many risks are reflected in the share price – speculative buy (€2.52).
Pensions consulting and administration business XPS Pensions offers a defensive income stream plus capital gains (181p). Diversified Gas & Oil is building up its production arm and also offers “a very generous dividend policy” (130p). Fast-growing small-cap Team17 offers exposure to soaring demand for video games (250p). Mobile-marketing solutions firm IMImobile should profit as commerce shifts online (275p).
A millennial-led travel boom is driving demand for online booking provider Hostelworld (315p). Shaftesbury’s ultra-prime West End London property portfolio makes it “near bullet proof to nasty shocks” (932p). Paragon Banking is serving up encouraging loan book growth but trades at an unjustified discount to its peers (473.5p).
FTSE 250 regeneration specialist St. Modwen Properties is on a selling spree that makes for a rosier dividend outlook (404p). Earnings growth at Barclays is outpacing that of rivals, but the shares have yet to reflect the good news (186p). Assura is one of the main players in the business of owning and leasing out surgeries to GPs, allowing it to offer stable “bond-like” income (57.5p). Magners Cider maker C&C Group is now much more balanced than it used to be and highly cash-generative to boot(€3.38).
A Swedish view
Finnish video-game developer Rovio has had an awful start on the Helsinki Stock Exchange since it floated last September, but the market is being too harsh, says Affärsvärlden. The mobile games pioneer, best known for the hit Angry Birds, saw sales increase by an impressive 55% in 2017, while operating profits doubled. This year has seen a reversal of fortune, but the longer-term outlook is encouraging. Rovio is working on developing ten more games to add to its portfolio and it also owns 80% of Hatch Entertainment, a streaming platform spanning 18 countries and offering 100 games. Rovio is a cheap but promising company operating in an attractive sector.
Tech behemoth Tencent Holdings has announced plans to list its online music business in the US. Details have yet to emerge, but some think it could raise as much as $1bn, giving Tencent Music Entertainment (TME) a valuation of $30bn. The business dominates the Chinese music-streaming market through its QQ Music, KuGou and Kuwo platforms, which have become important vehicles for Western pop stars attempting to reach a Chinese audience. It currently has around 600 million users; 15 million are paying subscribers. TME also has exclusive deals with Sony Music, Universal Music Group and Warner Music Group. Tencent has an overall market value of around $480bn.