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
This pharmaceutical giant is the fourth-largest quoted company in Britain, with its shares making up 4% of the FTSE 100 index. Emma Walmsley, the chief executive, is spearheading an ambitious plan to spin off the consumer pharmaceuticals division in 2022, leaving behind a pharma and vaccines operation investing heavily in cancer drugs. Research and development is the lifeblood of any pharmaceutical company, and GSK spends some £4bn each year to keep its pipeline full. Provided the demerger is executed well, the upshot should be lower debt and a more attractive growth profile. Buy. 1,779.75p
The Sunday Times
Those brave enough to invest in Shield this time last year have more than tripled their money. Shares in this biotech business have been on a rollercoaster ride over the past 18 months because of a drug trials saga about Feraccru, a treatment for patients with iron deficiency. Like many of its peers, Shield is loss-making, but results for the drug finally seem encouraging and open up a market potentially worth £760m per year. 181.5p
The Sunday Telegraph
Markets are warming to this asset manager’s defensive qualities following its demerger from the Pru. With £341bn under management, the division once played the role of plodding domestic operator while the Pru focused on Asian growth. Yet if the economy turns down, M&G will be insulated thanks to steady income streams from “heritage money” already invested in its products. That should also ensure reliable dividends. 217p
Three to sell
Motley Fool UK
Many an income chaser will be drawn to this “mining colossus”, which boasts a tempting 6.5% dividend yield. Trading on just 10.5 times forward earnings, it is also cheap, yet we wouldn’t touch it “with a bargepole”. Dividend coverage is already looking stretched and continuing bad factory data from China can only mean weaker demand for the firm’s copper, coal, nickel and iron ore next year. Rising production in core markets could weigh on the earnings picture into the next decade too. Avoid. 1,652.75p
This fintech business once led the way in linking up small merchants with debit- and credit-card payment networks. It was an underserved and profitable niche, with the stock soaring 600% in the 20 months to the end of 2018. Yet established industry players are now fighting back. Payments volume growth is decelerating and has undershot expectations for two successive quarters. A price/earnings ratio of 60 suggests that the market has mistaken a simple payments processor for a high-growth software play. Avoid. $61.72
Full-year profits are expected to fall by more than half at this car retailer. Once an outperformer, Lookers is now doing worse than its peers. New car sales fell 3.2% on a like-for-like basis in the third quarter, far worse than the 0.6% fall in the wider market. A probe into the group’s commissioning practices by the Financial Conduct Authority will make it even harder to plot a route out of the mire. Sell. 43.75p
…and the rest
There are welcome signs of a recovery at wound-care specialist ConvaTec. Buy (203p). Share-price weakness at aviation-services play John Menzies presents a buying opportunity in a sector with solid long-term growth prospects (391p). A new Apple product line-up is generating excitement in Silicon Valley, but with global smartphone sales on the decline it is best to wait and see if the latest hype is justified. Hold ($248.76).
The Daily Telegraph
Rightmove accounts for three-quarters of online property listings traffic. That market dominance means that even on a frothy 30 times earnings it is a buy (596.5p). Gold bugs may take a shine to established Australian gold producer Resolute Mining. But always remember that the risks in this sector are high (68p).
Asset manager Ashmore’s focus on emerging markets leaves it well placed to tap into “massive secular trends” – a “genuine growth story”. Buy. (473p). Consumer cybersecurity business Avast boasts more than 435 million users. That makes for “a vast” opportunity, but it’s a speculative buy (407.5p). A sluggish industrial market is doing no favours for electronics business discoverIE, but judicious acquisitions and improving margins suggest that there is opportunity at the current price (472p). Tap into growing Vietnamese gas demand through Asia-Pacific focused oil and gas play Jadestone Energy (54p).
WH Smith’s £312m acquisition of America’s Marshall Retail could double its fast-growing international travel division; buy into this journey towards new horizons (2,240p). Social care provider CareTech’s takeover of rival Cambian gives it scale and competitive advantage (391p).
A German view
Sweden is practically a cashless society these days. So it’s ironic that the country boasts the world’s second-biggest cash-handling company, says WirtschaftsWoche. Loomis provides companies in the US and Europe with armoured vehicles, safes and secure warehouses; it also replenishes cash machines. Cash’s share of overall transactions is dwindling, but the cash-payment market continues to grow in absolute terms as the global population expands and the number of financial transactions per person rises. Estimates suggest that it could be a fifth bigger by 2023. Loomis operates in a highly fragmented market, offering ample scope for growth by acquisition. The stock yields 3%.
Chinese start-up ByteDance is contemplating an initial public offering (IPO) in Hong Kong, says Henny Sender in the Financial Times. The company owns TikTok, an app for creating and sharing short lip-syncing and comedy videos, and Chinese news app Jinri Toutiao. The group was valued at $75bn in October 2018, marking a 100% increase in a year. ByteDance’s success has incurred increasing political pressure. TikTok was briefly banned in India earlier this year after it was accused of inciting racial hatred. In the US it has become the latest teenage craze and senators have called for intelligence officials to investigate it over the “national security risks posed by its growing use”.