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 price of copper has fallen to levels not seen since the last recession. The slump has seen shares in this Chilean copper miner fall 20% since April. But the long-term outlook for the metal, which is closely connected to global industrial demand, is auspicious as populations grow and get richer. Mining operations are always volatile, but Chile is stable, which lowers risk. With production costs falling, this is an chance to buy a “best-in-class” operator while sentiment is poor. 810p
The Sunday Telegraph
This “canny” London-focused housebuilder is a master of the art of buying low and selling high. Between 2009 and 2012 it used the opportunity presented by the financial crisis to buy up £1bn of land. The subsequent rally allowed Berkeley to distribute a cumulative £12.34 per share through dividends and buybacks between 2011 and 2019 – a handsome return given the shares traded as low as 700p at the height of the panic. With London property now in another downturn the firm looks poised to repeat the trick. 3,969p
The Sunday Times
A “dismal” line-up of films has hit cinema admissions at this £3.1bn FTSE 250 business. Sales in the first half of the year fell 11%. Yet investors should focus on the fundamentals. For all the talk of streaming, there are signs that US cinema sales are starting to stabilise. As one of life’s small pleasures, cinema admissions are “traditionally recession-proof”. With a new Star Wars blockbuster due over Christmas, “it may be time to grab a ticket”. 229p
Three to sell
The market has taken news of disappointing trial results for a new lung cancer treatment in its stride. AstraZeneca has ploughed roughly a quarter of its revenue into research and development over the past three years to bolster its drug pipeline. The odd setback is to be expected but the recent failure only makes the current heady valuation look more dubious. The pharmaceutical giant trades at a 38% premium to peers on an enterprise-to-cash-profit basis, well above historical levels. That leaves little scope for further gains. Sell. 7,337p
This wine retailer was created in 2015 when founder Rowan Gormley reversed online operator Naked Wines into bricks-and-mortar establishment Majestic Wine. Four years later and Gormley has concluded that the “future is naked”, with plans to sell off Majestic and reinvest the proceeds into Naked. Yet the share price has fallen since the merger and heavy investment has yet to translate into higher profits. With margins under considerable pressure, this is one to avoid. 263p
Motley Fool UK
Retail sales fell this month at their fastest rate since 2008. The gloom has already got to Tesco, with the stock down 7% in three months. Household belt-tightening is bad news for sales of electricals, while even UK grocery spending is contracting. An October no deal would see supplies disrupted, consumers heading for discounters and sterling weakness gobbling up “wafer-thin” margins. Avoid “like the plague”. 212.5p
…and the rest
Two new acquisitions by online fast-fashion “darling” Boohoo promise to expand the brand’s demographic reach and underpin further growth – buy (228p). A sell-off at precision engineer IMI has gone too far. This is a quality business that has a plan to grow profits in spite of the global industrial slowdown (955p). Turkish gas explorer Valeura Energy is a speculative buy that counts some “heavy-hitting” financial institutions among its shareholders (163p).
Shares in Ted Baker have slumped on weaker consumer sentiment, but with a yield approaching 5% this “quintessentially British” fashion brand is “too cheap to ignore” (912p). A power blackout earlier this month has thrust National Grid into the headlines but the market’s muted reaction suggests that there is no need to panic. Expect a 5.7% dividend yield this year (864.25p).
The Daily Telegraph
Investors should look past last month’s profit warning at Irn-Bru maker AG Barr: the business has no debt and boasts a long record of dividend increases (619p). SAP’s essential business software makes it a defensive play that trades on half of the valuation of some of the US tech giants (€106.86).
Student digs owner Unite Group is a “highly-efficient” business growing through acquisition – buy (1,039p). The London Stock Exchange Group’s acquisition of financial data business Refinitiv may turn the group into a “dominant global force” in market data provision (68.75p).
A German view
Gold mines have had a stellar year so far, with the HUI index jumping by 50% since June. However, it remains 200% below its all-time high in 2011, while the increasingly shaky global economic backdrop also implies ample scope for gains with these leveraged plays on the gold price. One to consider, says Börse Online, is Canada’s Barrick Gold. Its production costs are a mere $825 an ounce, which is low compared with most of its competitors and a far cry from gold’s current price of $1,530. The recent takeover of Randgold Resources, meanwhile, has given Barrick access to “expertise” in Africa as well as higher-quality gold reserves than its major US rival Newmont Mining.
Investment banks have begun vying for roles in the forthcoming initial public offering (IPO) of Saudi Arabia’s state-owned oil group Aramco. The company confirmed earlier this month that it still planned to go public; the flotation is now expected in 2020 and should value the company at a record $2 trillion. In the first six months of 2019 Aramco earned $46.9bn in the first six months of 2019, well ahead of the world’s top six oil majors combined. Meanwhile, stock exchanges are also lobbying for Aramco’s lucrative business. Officials from the London, New York and Hong Kong exchanges have reportedly visited Saudi Arabia in the past few weeks.