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
This Aim-listed medicines distributor acts as a global middleman, sending drugs that have been approved for use in some countries to regions where they have yet to get the green light. That might sound like the sort of activity that could interest the police, but demand for the services of this “ethical” supplier will surge in the next decade, particularly in emerging markets. Analysts think the stock is underrated – buy. 902.5p
The Sunday Telegraph
The crisis at Carillion has meant a “torrid time” for outsourcers this year. Mitie’s stock has crashed by more than 25% since full-year figures in June. Turning around the business, which ranges from escorting prisoners to serving beer at Wimbledon, will take more than a “quick wash and brush-up” but “the chance that Mitie’s recovery will get worse before it gets better” is receding – costs are falling, margins are improving and looser public-sector purse strings could also help. The shares are trading on eight times this year’s forecast earnings, making them worth a punt, but only for the risk-tolerant. 145p
The Mail on Sunday
Chancellor Philip Hammond may be trying to save the high street, but online shopping will double its share of retail sales over the next five years. Consumers now expect parcels to be delivered within 24 hours of purchase, which necessitates smaller urban warehouses for “last-mile” delivery. Warehouse REIT specialises in such facilities, with 92 sites close to urban centres and more than 850 tenants. The shares yield 6.25%. 96.5p
Three to sell
October was a good month for gold bugs, but a 16% bump in this Tanzania-focused miner’s share price was unjustified. The group is still mired in “existential risk” because of disputes with the Tanzanian government, which have included demands for the payment of an extraordinary $190bn tax bill. Negotiations are ongoing, but the Tanzanian government will drive a hard bargain. Majority shareholder Barrick Gold is merging with peer Randgold, but the detail of the agreement suggests the combined group may dispose of Acacia. 155p
Shares in the British carmaker have fallen 26% since flotation last month, but they still don’t offer much value. Sales volumes and selling prices have improved in recent years, but significant investment will be needed to fulfil future growth ambitions. That could mean disappointment down the line or extra fundraising, which will hit the share price. A price-to-earnings ratio of 48.3 means the valuation exceeds that of New York-listed Ferrari. “If you can afford to, buy the cars, not the stock.”1,401p
Motley Fool UK
A forward yield of nearly 6.2% will tempt income hunters, but HSBC could be a “value trap”. Slow dividend growth suggests caution about future prospects. Earnings at banks “wax and wane along with the ups and downs” in the macroeconomic backdrop. Any future plunge in profits will “take the share price and the dividend down too”. HSBC should be seen as a “cyclical investment first and a dividend opportunity” second – avoid. 649p
…and the rest
The Daily Telegraph
Recently-listed Aston Martin is making a clever pitch for the Chinese market with its new “super-luxury SUV”. The shares are worth a punt (1,477p). A housing slowdown has hit shares in ULS Technology hard, but the recent correction looks overdone – hold (84.9p).
Industrial real-estate investor Segro is tied into the e-commerce boom and the shares look good value, thanks to “Brexit-induced paranoia” (620.8p). Care-home owner CareTech’s £372m takeover of Cambian should enhance earnings growth and the dividend looks well covered (367p). Sugary food and drinks are coming under regulatory pressure, creating new opportunities for all-natural, zero-calorie sweetener maker PureCircle (340p).
The Mail on Sunday
Lok’nStore is still undervalued compared with peers as more and more firms and households turn to self-storage (415.5p).
Continental Europe has been slower than the UK to shift to online shopping. Buy into “big box” warehouse investor Tritax EuroBox to tap into the trend (99.2p). Shares in plumbing and heating equipment supplier Ferguson have sold off sharply, but worries about the group’s performance across the pond are overdone (5,283p). Shares in advertising giant WPP look “ridiculously cheap”, but there is likely to be further downside before a turnaround (888.5p). Rightmove operates in a crowded online property marketplace and is “languishing perilously close to the bottom of the FTSE 100” (456p).
A German view
Flughafen Wien, Vienna Airport group, is flying high, says Wirtschaftswoche. In the first nine months of 2018, passenger numbers in Vienna, a convenient central European hub, took off by 7.3% year-on-year to around 20 million. Flughafen Wien also runs the airports in Malta and Kosice, eastern Slovakia. Factor them in, and the number of check-ins rose by 8.7%. The number of flights rose healthily too, as did freight volumes. Vienna has managed to attract several no-frills airlines by offering potential rebates on airport charges. The group also leases shops, restaurants and car parks, ensuring high margins and a steady income even during a downturn. The stock yields 2.4%.
“Floats this year have been a bloody disaster. It’s a market that’s completely cr*p.” So says retail tycoon Chris Dawson, who has shelved the initial public offering of his discount homeware chain The Range . He had been considering a flotation to raise £2bn. Dawson has now decided a newly-signed partnership with supermarket group Iceland should take precedence, says The Sunday Telegraph’s Lucy Burton. Dawson, the owner of a Rolls-Royce with a licence plate reading DE11 BOY, has also taken a pay cut. He paid himself a £14m dividend for the year to January 2018, down from £100m the previous year, owing to the company’s investment in a £100m distribution centre.