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
This Dublin-based sales, marketing and support services group operates in 17 countries and joined the FTSE 100 in 2015. It is seriously acquisitive, having spent £3bn on 260 takeovers during its 24 years on the stockmarket. However, its borrowings are carefully managed and a recent share placing gives it the financial firepower for more purchases. The yield is not stellar but impressive growth makes this a buy. 7,000p
Identity fraud reached an all-time high in the UK last year, while the new GDPR rules place a greater burden on companies to safeguard data. That is all good news for this identity-data specialist, which helps firms verify the identity and location of its customers and provides technology for employee screening. A “towering” forward price-to-earnings ratio of 35 is intimidating, but contracts in Germany, Indonesia and the US make this a “long-term… growth play”. 583p
The Mail on Sunday
Xpediator helps almost 15,000 businesses worldwide transport goods efficiently and cost-effectively. Rather than owning lorries directly, Xpediator organises vehicle leasing and paperwork for clients. This is one firm likely to benefit from a disruptive Brexit as more complicated customs rules would increase demand for the services of an expert freight manager. Business is growing fast – interim results showed profits soaring by 132% – and brave investors should buy in as management looks to build a top-25 global freight forwarder. 64.5p
Three to sell
Capital & Counties (Capco)
The Sunday Telegraph
A slowing London housing market has prompted this property business to spin off its Earl’s Court development in west London, but potential buyers are hesitant. The spectre of a no-deal Brexit has haunted London property, with Capco shares down 16% this year. That fall has attracted value investors who hope this is the bottom. Yet the risks remain high and it could be several years yet before investors see meaningful returns. 266.3p
This luxury car brand is synonymous with James Bond films, and has therefore generated a huge buzz in advance of an initial public offering scheduled for Monday 8 October. Yet, with the shares scheduled to float at between £17.50 and £22.50 each, they may prove “a luxury you can’t afford”. The implied valuation makes for a trailing price-to-earnings ratio of 65 (Ferrari, by contrast, trades at 41). That values Aston Martin at about £5bn for a mere £77m in 2017 net profits. Add in the short-term challenge of Brexit turbulence and the long-term threat from electric vehicles, and this seems unlikely to prove a good long-term investment. 1,750p – 2,250p
This tiling business is well-run and boasts a dominant market share, but that will not spare it from faltering UK consumer confidence. “If consumers are not willing to spend, even the best-run business will struggle,” says Georgina Brittain, co-manager of JPMorgan Smaller Companies Investment Trust. Topps’ shares are down more than 20% this year and adverse currency movements are not doing a struggling sector any favours. 62.1p
…and the rest
The Daily Telegraph
WPP’s shares have slumped on fears that Google and Facebook represent an existential threat, but advertising industry revenue is holding up – hold (1,146p). A 4.3% yield means investors can afford to wait for the outlook to improve at defence contractor Babcock (722p).
An 8.3% forward dividend yield suggests that Vodafone is “priced for disaster”, but we think the challenges have been exaggerated – buy (169p). Soaring oil prices will support profits at Vietnam-focused oil business Soco International (82.2p). The hit from new regulations on fixed-odds betting terminals is largely priced in at William Hill, but the opening of the US sports betting market could prove a huge opportunity – a speculative buy (264p).
The Mail on Sunday
The number of people renting outside London has doubled since 2007, and the soon-to-float Multifamily Housing REIT is well-placed to cater to the renter generation (100p).
Weak commodity prices mean it takes nerve to buy mining stocks, but copper, zinc and lead producer Central Asia Metals is a “rare beauty” (236.5p). Value abounds in unloved UK equities and the Henderson Smaller Companies Trust is devoted to snapping up quality companies (919p). Currency movements have undermined performance at kettle-controls business Strix but there could be decent upside over the coming months (160.8p). Drinks giant Diageo posted a mixed trading update in September, but a strong portfolio of brands and global sales make it a stick (2,678p).
A downturn in Nigerian consumer spending has hit Imperial Leather soap maker PZ Cussons hard – avoid (235p).
A German view
Canada will legalise cannabis on 17 October, and analysts are predicting the market will take off like a rocket, says WirtschaftsWoche. But so have the stocks of Canadian pot producers, so there are no bargains left in the sector. An alternative approach is to scoop up a few shares of Ottawa-based Shopify, a fast-growing e-commerce platform. Users pay a monthly subscription and gain access to 600,000 digital shops and brands. More and more pot producers are selling their wares through Shopify, whose top line jumped by 62% in the second quarter and should eclipse $1bn in 2018. It has yet to make a profit but has ample cash reserves, with $1.6bn on the balance sheet.
Slack Technologies, the instant-messaging software popular in offices – often referred to as WhatsApp for companies – is planning an initial public offering (IPO) next spring, according to the Wall Street Journal. It is expected to be valued at more than $7bn, the level implied by a recent round of financing. That would make Slack one of the biggest tech IPOs since Snap floated in 2017, with a valuation of $24bn. The buoyant IPO market – shares in newly-listed tech firms have gained an average of 50% this year – is tempting tech groups to try their luck. More than 40 companies have listed in 2018, raising almost $17bn, more than in each of the past three years.