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
Major miners are emerging from "years of cost-cutting and efficiency drives"; now rising metal prices could spell opportunity. Sluggish copper and diamond prices have hampered Anglo American's performance this year, but that is outweighed by buoyancy in iron ore and its pricing power in the market for gemstones. A strong balance sheet and all-time high palladium prices suggest that there is "buried value" to be unearthed. 1,919p
One doesn't generally expect outsize returns from a £100bn blue-chip stock, but this energy major might just be the ticket. The shares have declined by almost a fifth since their April high owing to weak globaloil demand, but a 6.5% dividend yield provides insulation against capital losses. Such a high yield means that you could potentially "double your money" in about 11 years on dividends alone. What's more, the current pessimism about the future of oil looks overdone, while the business is also investing in more sustainable energy sources. Buy. 483p
This payments provider was once a "Woodford favourite", but is now one of the businesses tarnished by its connection to his recently closed Equity Income Fund. The company provides gadgets enabling cashless payments to convenience stores and also has contracts with big online retailers. The shares have slipped after a run of bad news. Yet the business has long-term potential. There is also a 9% dividend yield to enjoy. 905p
Three to sell
Eland Oil & Gas
A 166p-per-share takeover bid from Seplat Petroleum means that it is time to take profits in this Nigerian oil play. The deal values Eland at £382m, a 28% premium to the pre-deal market valuation. Around 60% of the shareholder base back the move. Those who bought at the start of the year are sitting on a near-60% gain. Management deserves credit for successfully meeting the many challenges of operating in Nigeria and building a business with enough scale to attract the attention of a suitor. 167p
Some may decry the loss of yet another British tech star to US private equity, but a better question is "what took the buyers of Sophos so long?" The group boasts an impressive reputation for battling ever-growing cyber threats and the weak pound only sweetens the deal for foreign buyers. Now acquisitive buyout firm Thoma Bravo has had a 583p-per-share offer accepted by the board. A bidding war is unlikely to follow. Cash in and reinvest elsewhere. 565.75p
The last two years have not been kind to this retailer of car parts and bikes, with four profit warnings causing the shares to halve. A dividend yield now at 10.8% looks "ripe for a cut". That would leave shareholders owning "a low-growth, bricks-and-mortar retailer with dwindling profits". Management has adopted sensible strategies in the face of online competition, but in the current retail storm it looks like the situation will "get a lot worse before it gets better". Avoid. 171p
...and the rest
Online sales recently surpassed bricks-and-mortar revenue at Next. Share buybacks and a solid dividend mean that the shares are worth tucking away (5,966p). Hilton Food is diversifying away from its traditional focus on meat packaging. "Solid growth, high returns and dominant market position" make this a business worth owning (981p). Packaging distributor and manufacturer Macfarlane has shown that it is a lean and resilient operator despite tough markets.
The Mail on Sunday
When a car is damaged in a collision, Redde steps in to provide replacement vehicles and repair services. A 10%-plus dividend yield would usually "ring alarm bells", but in this case it is part of a deliberate and prudent pay-out policy. The shares should rise (114p).
FTSE-250 infrastructure investment trust Foresight Solar offers a 5.7% dividend yield and is increasingly favoured by institutional investors (117p). Electronics engineer discoverIE has delivered 9% half-year revenue growth in the face of slowing global trade, thanks to its focus on niche and growing markets buy (445p).
A move into Argentinian sovereign debt by emerging markets investment group Ashmore is emblematic of its counterintuitive approach:it is a buy, but only forinvestors with long-time horizons (490p). Ignore the talk of the demise of vaping British American Tobacco and Imperial Brands are a "smoking hot bargain" at the current price (2,693.5p; 1,842.5p).
A German view
The world's population is growing, but its supply of arable land isn't, says WirtschaftsWoche: climate change is causing more droughts and floods. So boosting plant yields is crucial. Enter Germany's KWS Saat, a producer of high-yield seeds with operations in 70 countries. Its products cover the world's top ten crops, while it dominates the market for sugar beet and rye.
A takeover of the Netherlands' Pop Vriend Seeds has allowed it to gain a foothold in the vegetable-seeds market. Plant breeding is a study-intensive and expensive business KWS spends around a fifth of its turnover on research and development which deters potential rivals.
Despite ongoing political turmoil, Hong Kong's initial public offerings (IPO) market is set for another billion-dollar launch. ESR Cayman, which develops and manages warehouses for e-commerce companies, has revived its plans for a flotation after postponing one in June. The company is offering 653.7 million shares priced between $2.07 and $2.22, valuing it at $6.3bn-$6.7bn. Even if priced toward the bottom end of the range, ESR would raise $1.35bn, making it Hong Kong's second-largest IPO this year after Budweiser Brewing Company's $5.8bn launch. It would also would surpass Chinese sportswear retailer Topsports, whose IPO raised over $1bn earlier this month.