Three to buy
Codemasters
The Sunday Telegraph
"Music, books and video" are shifting onto tablets so fast that come Christmas morning Father Christmas has "very little to leave under the tree" these days. Developer Codemasters, which is best known for its motor-racing games, is at the forefront of the trend, with 62% of first half revenues coming from digital downloads. Digital technology reduces the need to invest in physical stock, which raises margins and makes it easier to monetise back catalogues. On a forecast price/earnings ratio of less than 12 the shares are also noticeably cheaper than those of industry peers. Buy. 239p
Tatton Asset Management
The Sunday Times
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New rules governing how financial advisers earn commission mean that they are increasingly outsourcing the work of stock-picking to online investment platforms. Assets under management at such platforms have doubled from £250bn to £500bn over the past five years and this fund manager is one of those in "the sweet spot". Pre-tax profits rose 20% in the first six months and the dividend has leapt 75% over the past two years. It remains to be seen whether the model is capable of weathering a serious downturn, but current trends make for an auspicious outlook. 236p
Reach
Shares
Previously known as Trinity Mirror, the publisher of the Daily Mirror has suffered greatly from the decline of print media. Yet few appreciate the promising growth in the group's digital operations. Its titles' websites have 40 million unique visitors per month and enjoyed "market-leading advertising share" during this summer's Champions' League final. On a price/earnings ratio of 2.5, this is a "compelling opportunity". 98p
Three to sell
Croda
The Daily Telegraph
What's not to like about a business with a "powerful market position", returns on capital of more than 20% and a two-decade run of rising dividends? This chemicals business develops products used in cosmetic creams and lotions, agricultural crop care and high-performance coatings. It is undoubtedly well run, but investors are asked to pay dearly for that feeling of security. A forecast price/earnings ratio of 26 and a sub-2% dividend yield look excessive, especially given that sales and earnings were "broadly flat" in the first half. Avoid. 4,964p
Macy's
Barron's
Shares in the leading operator of American department stores are down by nearly half this year and investors should not expect a "miracle on 34th" street this Christmas. Macy's is best-known for the glitz of its Manhattan flagship store, but most of its 600-odd shops do not cater to a particularly well-heeled clientele. The stock costs just six times this year's projected earnings, yet at a time of strong US consumer spending there is "no excuse" for recent struggles. $15
Glencore
Motley Fool UK
Shares in this "mining colossus" are down 26% so far this year and prospects for 2020 are dim. A slowing global economy and concerns about the implications for commodity demand have hit the entire sector. Closer to home, news of a Serious Fraud Office probe over "suspicions of bribery" will mean a nervy New Year for investors. Analysts are predicting a 55% bounceback in net profit next year, but that looks "far-fetched". 220p
...and the rest
The Daily Telegraph
The BlackRock Frontiers Investment Trust provides exposure to the likes of the Philippines and Nigeria, "far-flung" but potentially undervalued parts of the world. Buy (128p). "Under-the-radar tech star" Boku builds systems that let users buy Apple's and Spotify's products without a bank account. Buy (82.5p).
Investors Chronicle
This is the "most lucrative time for defence spending since the end of the Cold War" so buy into a turnaround at defence giant Babcock International (590.5p). Zoo simulation game Planet Zoo is just one of independent game studio Frontier Development's recent successful releases. It boasts a growing portfolio and looks good value (1,212p).
Shares
UK smaller companies are unloved at present, but sentiment is on the turn. Montanaro UK Smaller Companies Trust offers a way to buy in and pays a tempting 4.8% dividend yield (131p). Talk of new competition from Amazon and Walmart has dented Ocado's share price, but this could be an opportunity to "top up on weakness" in a firm with global growth prospects (1,219p). Excellent first-half results at Pets At Home make this a rare turnaround success story. Keep buying (242.5p).
The Times
A structural undersupply of self-storage space and "solid demand" make shares in Lok'nStore worth owning (642p). A new CEO and turnaround plan will encourage some to look again at consumer goods giant Reckitt Benckiser, but the shares seem fully valued at the current price (5,914p).
A German view
When Deutsche Telekom (DT) said it would enter the streaming wars many dismissed it as hopelessly late to a sector dominated by the likes of Netflix and Amazon, says, Arno Konkel in Focus Money. But the streaming market is far from saturated as people increasingly opt for the convenience of television on demand via the internet. One estimate says the German market can grow by another 40% to €1.5bn in four years. DT boasts 13 million broadband connections, so there is plenty of scope for enticing customers with its streaming package. It has also bolstered its sports television offerings by securing the broadcasting rights to the UEFA Euro 2024 competition. The stock yields 4.3%.
IPO watch
Denmark's Astralis Group has become the first e-sports team to go public. It floated on Nasdaq's Copenhagen exchange for small companies on Monday in a bid to raise up to $22m. E-sports, in which video-game players take each other on in front of spectators (who watch on streaming websites or in actual stadiums) has become a big business. The global market is worth $1.1bn and has doubled since 2016. The sector will be worth around $2bn in 2020, with an estimated 595 million people worldwide set to become spectators by then. Astralis is ranked the world's number one in the popular shooting game Counter-Strike and has won millions of dollars in prize money.
