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
4imprint
Shares
This US-focused business sells branded promotional products, such as mugs, pens and dongles, putting other companies' logos on them to help them promote their wares. It outsources the actual manufacturing of the promotional products to third parties, using its proprietary software and database analytics to concentrate on marketing its offerings to clients efficiently. The business generates plenty of cash, while management has "a nice habit of under-promising and over-delivering". The shares are currently trading towards the bottom of their historic range, marking a good entry point into a long-term growth stock. 1,962p
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Inspired Energy
Money Observer
This energy procurement consultant advises businesses with atypical needs on the best contracts and tariffs using a "highly sophisticated" set of tools. It earns money from both switching commissions and per-unit-of-energy commissions paid by the supplier. The small-cap announced in December that it plans to raise capital to fund acquisitions. It yields 3.26%, with a history of progressive dividend increases. 17.63p
Frontier IP
The Mail on Sunday
Britain's universities are world-class, but far too little research makes its way into the wider marketplace. Frontier takes a stake in university spin-offs and offers advice and industry contacts in return, acting as a go-between for academics and business partners. Clever innovations in the portfolio include robotic arms capable of picking soft fruit and new ways of testing the cleanliness of water. Adventurous investors should be rewarded. 82p
Three to sell
Jupiter Fund Management
Investors Chronicle
Deteriorating equity markets made last year a miserable one for this asset manager, with funds under management falling 15% during 2018 and the shares down more than 40% in the past 12 months. The firm's "heavy bias towards flightier retail assets" has compounded the problems, with institutional investors "markedly" reinforcing short positions in the stock in January. Falling earnings will also bring Jupiter's generous special dividends under pressure. Sell. 328.6p
Castings
Investors Chronicle
Management at this iron-castings business say that it will take "at least two years" to turn around its troubled machining operation. However, the group's problems extend beyond one division. Margins have come under increasing pressure over the past few years amid changing expectations from buyers, while uncertainty over Brexit is also hampering this pan-European operator. On the plus side, the group boasts a strong balance sheet and no debt, yet there is still a "Herculean task" ahead.The upshot? It is not worth waiting around. 389p
Rentokil Initial
The Sunday Telegraph
Shares in this pest-control business have "successfully exterminated memories of past underperformance", rising tenfold in ten years. Warmer global temperatures which encourage rats to breed mean that the $18bn global pest-control market is growing at 5% per year. The sector has a reputation for high margins and strong cash generation. Yet on a "whopping" 25 times this year's earnings the upside looks limited. Take profits. 353.1p
...and the rest
The Daily Telegraph
Housebuilder Crest Nicholson may struggle to grow for now, but it is worth holding onto for a 8.9% dividend yield that looks secure (375.2p). Investors in Staffline have no choice but to hold following a suspension of the shares while the recruiter examines ominous-sounding "concerns" over its accounting practices (670p).
Investors Chronicle
The growth in online digital content means that language translation specialist SDL is selling into a growing market (532p). Expansion is running ahead of schedule at the The City Pub Group and the business could become a takeover target for a larger operator (204p).
Shares
Consultancy Alpha Financial Markets Consulting boasts an enviable client list of wealth managers and generates plenty of cash to fund further expansion (236p). Johnnie Walker whisky-to-Smirnoff vodka maker Diageo offers impressive global diversification, while strong cash flow provides a defensive moat (2,939p). Blue Prism, which promises to help businesses automate mundane office tasks, has yet to make a profit but is generating plenty of excitement an attractive proposition for investors willing to play thelong game (1,318p).Pre-tax profits have dipped at precision engineer Renishaw, but a superior track record bodes well (4,368p).
The Times
Educational publisher Pearson rose more than 27% last year, but it remains to be seen whether it can maintain printed-book revenues while managing the shift to digital hold (926.4p). The world's biggest caterer, Compass Group,is a "quiet overachiever" that should continue to deliver despite looking pricey (1,760p).
A German view
It's time to take another look at Nestl, says Florian Sllner in Der Aktionr. The Swiss consumer-products giant is often written off as a staid and ethically dubious multinational. But it is getting its act together in every respect. It has responded to the rise of vegetarianism with a new meat-free food-range, Garden Gourmet, which includes a veggie burger that supposedly smells like a real hamburger. Consumers worried about the provenance of a Nestl product will soon be able to scan a QR code and find out exactly where it comes from. Meanwhile, management is ditching poorly performing brands, which will give overall profitability a hefty fillip. The stock yields almost 3%.
IPO watch
It was a "dry January" in the initial public offerings (IPO) market, says Katie Martin in the Financial Times. Due largely to the US government shutdown, which paralysed the Securities and Exchange Commission, the regulator that reviews new listings, the number of flotations on Wall Street fell to just one, compared with 18 in January 2018. Shares in New Fortress Energy, an exporter of liquefied natural gas, slumped by 8% on their debut. Recent market volatility also helps explain why there were no new listings in Britain and only one in Europe last month. Globally, the number of IPOs declined by 60% year-on-year; the amount raised, $2.6bn, marked an 80% reduction.
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