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

Direct Line

The Sunday Times

Motor insurers face many long-term challenges, from the prospect of safer driverless cars disrupting the market to pressure from watchdogs to treat loyal customers better. The business has also been slow to adapt to the digital age, but Direct Line recently launched Darwin, a digital brand tailored to the price-comparison websites where most insurance is purchased nowadays. An 8% fall leaves the shares looking cheap on a dividend yield of 6%. Direct Line is "revving to go". 338p

easyHotel

The Times

This budget hotel operator keeps making progress, yet the stock has slumped as though it had issued a profit warning, down from highs of 128p last year. Political uncertainty has reduced both leisure and corporate demand for hotels, yet with an average room price of £45 per night easyHotel is better placed than rivals to weather any downturn. The shares deserve to trade above 2014's 80p float price. 70p

Morses Club

The Mail on Sunday

Doorstep lenders are often accused of "charging too much and harassing late payers", but they serve a real need in a country where one in five adults cannot borrow from mainstream lenders. The sector is more regulated than it once was and Morses is trying to take the practice upmarket, launching a specialised debit card to make receiving and spending loans smoother.

The firm has also moved into the online lending market.The shares have done wellsince listing in 2016 and thereis "plenty more mileage" inthe stock. 173p

Three to sell

IWG

The Sunday Telegraph

Co-working and corporate downsizing have sparked a boom in demand for serviced offices provided by the likes of IWG's Regus brand. The group is ploughing about £300m a year into capital expenditure to create flexible working spaces similar to those of US start-up WeWork. The result is that over the last three years underlying earnings have declined while net debt has more than tripled. New accounting rules for leases will do nothing to flatter the books either. Trading on 20 times this year's forecast earnings, the stock is best avoided for now. 275.75p

VP Group

Shares

News of a Competition and Markets Authority (CMA) probe into possible price-fixing at VP and two other construction suppliers should prompt investors to err on the side of caution. Recent performance at the specialist-equipment rental firm has been mixed, with steady demand in the core UK division and good numbers in Asia, but continued weakness at the offshore oil and gas unit. Big potential fines now mean the sensible move is to absorb the loss and await the outcome of the probe. 916p

Rolls-Royce

Investors Chronicle

A raft of "exceptional" charges saw Rolls-Royce sink to a loss of £803m in 2018. Underlying pre-tax profit was £616m, while improving free cash flow and a pick-up in orders are grounds for optimism. However, accounting changes are flattering the figures, while deteriorating blades in the group's Trent 1000 engine are another worry. Given a softer outlook for aviation in thenear term, we think it is timeto "eject". 916p

...and the rest

The Daily Telegraph

Xaar

(86.75p)

Oakley Capital

(197p)

Dunelm

(880p)

Investors Chronicle

Advanced Medical Solutions

(324p)

The Mail on Sunday

Cake Box

on delivering" (158p).

Shares

Judges Scientific

(2,850p

Central Asia Metals

(257.5p)

The Times

Hollywood Bowl Group

(216p)

An American view

Orders were up by 15.7%year-on-year, and there is no sign of demand slowing. The company is debt-free and plans to bolster growth further with acquisitions. The stock has risen strongly this year to €35 and looks set to reclaim last year's record peak of €60.

IPO watch

initial public offering (IPO)

Andrew Bary in Barron's. Pinterest, the social-media site based on images and videos the online equivalent of a bulletin board is about to float and will reportedly offer its stock for $15-$17 a share, suggesting a valuation of $11bn, a tad less than the $12bn it was deemed worth in its last private funding round. Not only is it "[pricing] the deal to sell", but unlike Lyft it is also close to making an annual profit.

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