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
“Ethically flexible” investors sometimes think that “sin stocks” such as this cigarette giant deliver better long-term returns because others steer clear, making them cheap. That is not always true: alcohol sellers and casino operators currently trade on rich multiples. But the Marlboro maker’s 6.2% dividend yield and 2019 earnings multiple of 12 are attractive. Earnings growth has been remarkably steady while investments in cannabis and e-cigarette businesses give Altria a stake in the future too. $50.38
The Mail on Sunday
Far from the madding crowd of the main airport terminal, the users of business and private jets travel in comfort. BBA helps top executives to move from point A to B with minimum fuss by providing everything from jet fuel and conference rooms to customs and immigration facilities. The firm runs 200 such operations at airports worldwide and is the clear leader in its field. Another source of revenue is the spare plane-parts division, which has quadrupled in size over the past decade. 248p
Consumers need fast and reliable broadband more than ever, but outside big cities coverage can still be patchy. Bigblu solves that problem by buying satellite broadband and then plugging homes and businesses into the web. It is the world’s fourth-largest satellite broadband provider, with operations across the UK, mainland Europe and Australia. The firm is not forecast to turn a profit until 2020 as management focuses on expansion. That increases the risks, but this is a structural growth story and Bigblu has few competitors. 106p
Three to sell
The biggest British insurer by market share has more than 33 million customers worldwide and generates 60% of its earnings in the UK. Aviva is a “composite insurer”: it offers many different types of insurance and has its own fund manager. The theory is that this means more scope for cost efficiencies and product cross-selling, but the business has struggled to be more than the sum of its parts. The shares are inexpensive, but in “a fiercely competitive and… cyclical market” investors should avoid them for now. 425.25p
Higher compliance costs and falling funds under management have hampered this private-client stockbroker’s efforts to fatten margins. Turbulent stockmarkets make investors more likely to pull funds from advisory and brokerage accounts, while Charles Stanley has been slower than competitors to shift to more predictable and “stickier” discretionary funds, which see clients take a more hands-off approach. The shares trade at an unjustified premium to peers. 254p
An adverse court judgement means that this pharmaceutical business will face more intense competition from generics. The US Court of Appeals has rejected Indivior’s bid to block Indian competitor Dr Reddy’s from selling a copy of Suboxone Film, used to treat opioid addiction. New drugs are in the pipeline, but it remains to be seen whether they can mitigate the threat of a rapid loss of market share on older products. 110p
…and the rest
Healthcare and consumer goods-focused Personal Assets Trust is a good pick for those wishing to add some “defensive ballast” to their portfolios (40,200p). Keep buying Clinigen: the pharmaceutical group’s $210m acquisition of the US rights to cancer drug Proleukin enhances growth prospects (925p). Shares in Cineworld have barely budged since last spring despite a flow of encouraging trading news. That makes the cinema chain a long-term buy for investors who can stomach its elevated debt levels (260.5p). News of momentum in its oncology-drugs portfolio and strong growth in China bolsters the investment case for AstraZeneca (6,084p).
The Daily Telegraph
After the Carillion debacle few will want to touch outsourcers, but infrastructure specialist Costain has a “far more sensible business model” and the shares are cheap (361.5p).
MJ Gleeson’s distinctive budget model and strong growth outlook mean that it shouldn’t be “lumped in” with other housebuilders (752p). Early stage miners are always a high-risk bet, but Danakali, which is preparing to mine sought-after fertiliser sulphate of potash in Eritrea, offers the opportunity to buy in “on the ground floor” of a “world-class” project at a very low price (45p).
Energy group SSE yields a whopping 8.1%, but it is cheap for a reason. It faces challenges from regulators and start-up competitors (1,201p). Buying into a recovery at legacy-software group Micro Focus looks too risky: it operates in a “complex and… competitive market” (1,748.5p).
A German view
Organising staff rotas, especially in large operations such as hospitals, is practically impossible without information technology these days, says WirtschaftsWoche. No wonder more and more companies are discovering Germany’s ATOSS, which specialises in workforce-management software. Major customers include Aldi and Coca-Cola. The market is growing at more than 10% a year as more and more firms digitise and automate their activities. A shift to renting out the software on the internet, instead of relying on one-off purchases, has led to steadier revenue streams. The group is set to grow sales by over 10% this year to around €70m and net income should reach a record €12m.
Pinterest is reportedly the latest big tech name to contemplate an initial public offering (IPO), says Olivia Zaleski on Bloomberg. The social-media site is based on images and videos of people pursuing hobbies ranging from baking to gardening; these are supposed to encourage users to get in touch with like-minded people. Pinterest is expected to float in the US and seek a valuation of at least $12bn. In 2017 the group raised $150m in a private funding round that valued it at $12.3bn. Founded in 2010, it is among the oldest of Silicon valley’s unicorns (start-ups valued at over $1bn) to prepare to go public this year. Ride-sharing apps Lyft and Uber are the most famous.