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
NMC is “one of those FTSE 100 businesses that tends to slip under the radar”. But it deserves a close look. It is the largest private healthcare provider in the United Arab Emirates, and runs 200 facilities, including hospitals and surgeries in more than 15 countries. NMC is “operating in a fragmented and consolidating sector where scale increasingly means power”. It has bulked up with acquisitions, but is growing healthily under its own steam too. Sales rose by 28% to $2bn last year. The shares “feel oversold”. 2,288p
The Gym Group
The Sunday Telegraph
Gym chains “have expanded and contracted like exercise fads”, but no-frills operator The Gym Group looks likely to last. It has notched up a 20% year-on-year increase in membership in the past six months and boosted average revenue per member per month by 5.6% to £15.47; the company has persuaded more people to try its premium package for £17.98 a month. A slowing economy could hit gym membership, but the group’s budget prices should shield it from a downturn. 262p
The copper market looks undersupplied, yet prices are at a two-year low of $5,800 a tonne. The trade war has undermined confidence in the market, but “the fundamentals are likely to reassert themselves” and KAZ offers the “best prospect of a rerating”. It has two low-cost copper mines and also boasts plenty of gold. If gold stays above $1,400 an ounce, cash flow will rise quickly. The stock is a speculative buy. 544p
Three to sell
Specialised engineering materials producer Versarien fell deeper into loss last year after its graphene business failed to produce “revenues of any material amount”. Indeed, understanding just how much money it makes from the revolutionary material is “challenging”, as it “doesn’t disclose the value of its deals with its partners”. A recent £5.2m share issue means it won’t be tapping shareholders for more cash soon, and it hopes to establish a subsidiary in China. But it is operating in an “undefined market that is difficult to grasp”. As a result, we await “more concrete orders” before reviewing our rating. Sell. 129p
There’s “nothing new” about defence giant BAE Systems’ relationship with Saudi Arabia. But with investors seeking to “ring-fence their portfolios from environmental, social and governance hazards”, along with a UK government ban on licences for weapons that could be used in the Yemen conflict, some of the firm’s activities face “an uncertain future”. Add in “operational issues [and] weak cash performance” and the stock is a sell. 523p
The Mail on Sunday
A second profit warning in seven months risks losing online-fashion retailer Asos its “unofficial title as the poster boy” of the junior stockmarket, Aim. The group blamed IT problems in warehouses overseas for hampering deliveries and sales. Shareholders must wish they had had the foresight of co-founder Nick Robertson, who in April sold 15.3 million shares at £37.23 each. Today, they are 40% lower. 2,121p
…and the rest
Brexit has weighed on the share price of small-office landlord Workspace over the past year. However, fears are overdone and there is still plenty of room for the dividend to grow – buy (881.5p). Profits have been “erratic” at tile-maker and distributor Victoria and debt is soaring. Steer clear (500p). Burberry’s sales have exceeded analysts’ expectations and plans to cut costs and revitalise the brand are going well. The stock is still a buy (2,357p).
The Daily Telegraph
Asia-focused investment trust Symphony International is trading on a wide discount to net asset value (NAV) of 45%. Even so, the potential rewards are balanced by the risks. Hold. (58.5USc). Shares in Polar Capital Technology have performed well in recent days, yet the discount on the shares of this “well-managed” tech trust endures: buy (1,396p). The cut to Royal Mail’s dividend in May came as a blow, but the trading update revealed “no new bad tidings” and the outlook remains unchanged. Hold (216.1p).
Companies are coming under pressure to look after their customers’ data more securely. Office services firm Restore looks set to cash in (420p). A profit warning has seen the shares of soft-drinks maker of Irn Bru, AG Barr, plummet by a fifth since May. “Investors prepared to show patience should view the sell-off as a buying opportunity.” (653.6p).
Going after commercial contracts has done wonders for Oxford University spin-out Oxford Instruments and it is looking “increasingly compelling”. However, it’s fully priced for now (14.4p). The turnaround plan of developer St. Modwen Properties is showing strong signs of paying off, and higher dividends should be on the way – keep an eye out for dips (415p).
A German view
Germany’s Hella is a car-part supplier that should have little difficulty coping with the shift towards electric vehicles, says WirtschaftsWoche. It is one of the world leaders in headlights and lighting systems, products crucial to both electric vehicles and traditional ones.
The group’s electronics division is especially promising, with components for stop-start systems and products for managing batteries in hybrid cars among the offerings.
Hella is also working on sensors and other systems for self-driving cars. It has also been ditching “less exciting” businesses, such as its wholesale division. The firm is debt-free. The stock looks reasonable on a 2020 price/earnings ratio of 11 and yields 2.5%.
Last week saw the biggest Wall Street debut by a Chinese company this year. DouYu is a popular e-sports streamer (it shows people playing video games against each other), whose interactive streams encourage users to chat and watch further content created for the platform.
It started trading on the Nasdaq with the shares priced at $11.50 each, raising $775m. That eclipsed the $645m secured by Starbucks’s rival Luckin Coffee in May.
Several other Chinese technology firms have put US flotation plans on hold due to the trade war, but tensions have ebbed in recent weeks and DouYu is keen to build up a war chest to take on a major rival.