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
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
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
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
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
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
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
Advanced Medical Solutions
The Mail on Sunday
on delivering" (158p).
Central Asia Metals
Hollywood Bowl Group
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.
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.