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
Anglo Asian Mining
The Mail on Sunday
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This Azerbaijan-based gold, copper and silver miner listed on London's Aim market in 2005. The shares rose to 120p by the end of that year and crashed as low as 4p during the financial crisis. Yet it now looks ready to make up for previous disappointments, with one of the lowest costs of production in the industry, and trade-war uncertainty set to boost the gold price. A maiden dividend could prove a catalyst for substantial gains. 45p
Worldpay
Shares
This payment-processing firm deals with more than 40 billion transactions per year across 146 countries. A $10bn merger with Vantiv earlier this year saw the new business move its primary listing to New York and drop out of the FTSE 100. That meant a lost opportunity for UK-only investors, but it has left the stock looking cheap considering the firm's growth prospects. Online shopping is booming all over the world and synergies from the Vantiv deal could reach $280m by 2020. 7,442p
Safestore
The Times
Self-storage is a hot sector, with individuals and businesses paying to keep their possessions secure when they "move, go through life-changing experiences such as divorce or need to store materials conveniently". Safestore is the biggest provider of self-storage units in Britain, but rival Big Yellow has been "snapping at its heels", raising £67m from investors to fund another 11 sites over the next two years. This is a tough call, but Safestore's existing estate puts it ahead for now, and a French division provides some diversification. 549.5p
Three to sell
International Consolidated Airlines Group
The Times
British Airways is sometimes described as a "pension scheme with an airline attached". Trustees have concluded a £4.4bn deal with insurer Legal & General that offloads some of the pension risks, but the schemes will continue to throw up problems for owner IAG. Transatlantic competition from Norwegian Air could erode market share, while this summer's cyber attack, regular union run-ins, rising fuel costs and no-deal Brexit uncertainty all add to the pressure. 679.75p
Metro Bank
Investors Chronicle
Many of the post-financial-crisis challenger banks have entered niche, high-margin business areas, but Metro has positioned itself squarely in the mass market, competing with high-street banks for deposits and lending. A costly branch-expansion programme has not been backed by rapid enough deposit growth, yet the shares remain more highly valued than those of any other UK-listed mainstream or challenger bank. The group's alarming habit of regularly asking investors for extra capital is also unnerving. 2,708p
Vodafone
The Daily Telegraph
The FTSE All-Share has climbed 4% since March, but the gains have not been evenly shared. This global telecoms operator has seen its stock lose 20% since the spring, and forthcoming interim results this November could bring more bad news. Competition in Spain and Italy is hotting up, while this year's UK spectrum auction cost more than expected. Income seekers could be in for a shock down the line. Steer clear. 165.75p
...and the rest
The Daily Telegraph
News that Dyson is using specialist plastic components made by Victrex is a boost, but the shares are already dearly rated hold (3,284p). Renewed optimism about a joint venture with McColl's Retail Group has sent shares in Morrisons to their highest level in almost five years hold (266p). The bad economics of home delivery in rural areas mean that US low-cost convenience-store operator Dollar General looks immune to the Amazon threat ($111.50).
Investors Chronicle
Short-term challenges have depressed the share price at engineering services group Renew, creating an excellent opportunity to buy into a business that will benefit from increased government spending on railways (390p). The global video-games market is booming, and Frontier Developments is ideally placed to benefit (1,010p).
The Mail on Sunday
Restaurants and bars are feeling the pinch, but drinks-focused City Pub Group is bucking the trend "existing investors should hold" and newcomers "could also swallow a few shares" (227.5p).
Shares
Shares in Surrey-based software group Sopheon have been on a tear, but still have further to go (930p). There are no signs yet of any nasty surprises after Melrose Industries' recent takeover of engineer GKN (216p). Solid half-year results mean it is worth sticking with independent video-games business Team17 (230p). JD Sports Fashion is "firing on all cylinders" amid the boom in "athleisure" wear 491p). Growth prospects are brightening at compliance- and safety-rules software supplier Ideagen after a second US acquisition (147.5p).
A German view
The latest set of results at Edel, a Hamburg-based record label and music publishing group, sounded good, says Brse Online. Sales climbed by 8% year on year to €106m in the six months to April, following a similar increase in the year to last October, while net income grew by a fifth to €3.6bn. The group is benefiting from the vinyl boom, one of the music industry's key growth stories, while the music-streaming division is doing well, too. The group has been investing heavily to fund future growth. Investors aren't giving the family-run firm enough credit for its performance and prospects. The stocks looks a bargain, trading at 11 times 2019 earnings and offering a 3% dividend yield.
IPO watch
America's Eventbrite, an online event manager and ticket seller, has filed for an initial public offering in New York. The company is offering ten million shares for around $20 each, implying an overall valuation of $1.5bn. The group is well placed to take advantage of the shift towards buying experiences rather than things, as David Evans notes on SeekingAlpha.com. The platform has proved adept at enticing event hosts "through word of mouth and minimal marketing" and matching them up with punters. It boasts a 97% customer retention rate. Sales jumped by 61% year on year in the first half of 2018. Eventbrite has yet to make a profit, but is at least cash-flow positive.
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