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.

Two to buy

Vestas

(Investors Chronicle) Denmark’s Vestas has installed almost a fifth of the world’s wind-turbine capacity outside China. It is the world’s top supplier of onshore turbines. Government subsidies to the “green” economy have made wind power more popular, but increased competition has squeezed margins. That problem should subside this year, however, and “momentum is building in higher-margin servicing” post-installation. The company has been debt-free since 2013 and has over £1bn of net cash. A valuation of 26 times 2021 earnings is reasonable given the auspicious long-term outlook. 943kr

Pernod Ricard

(The Times) France’s Pernod Ricard is the world’s second-biggest drinks group behind Diageo. Activist investor Elliott Advisors had been pressing it to merge with a large rival to improve operating margins, but CEO Alexandre Ricard – whose family hold 14.2% of shares and 20.1% of the voting rights – gave the idea “short shrift”. However, he is following a policy of “bolt-on acquisitions” and improving margins is part of his plan. Despite Covid-19 and a €999m writedown (largely due to Absolut Vodka, which relies on airport sales), it has increased its market share while profits have fallen less than expected. €142

Two to sell

J Sainsbury

(Investors Chronicle) The supermarket group had steadied the ship after the pricey failed merger with Asda, but the pandemic has brought new problems, notably a squeeze on margins amid a shift towards less profitable online sales and large potential losses at its bank. The balance sheet remains “stretched”. The shares are inexpensive, but the growing army of short-sellers is right to sense “a value trap”. 213p

FirstGroup

(The Times) “There is... no case for investing in a UK public transport stock.” This train and bus operator has not paid a dividend since 2013 and is struggling to cope with its debt load. And don’t count on matters improving. The sale of its US operations, first announced in March, will produce little money and Britain’s semi-privatised railway system looks likely to be scrapped. Bus systems need massive investment. Avoid. 50p

...and the rest

The Daily Telegraph

Aviva’s new CEO Amanda Blanc aims to reform the underperforming insurance giant. Its “decent digital capability” and strong balance sheet bode well. Covid-19-related claims may inflate premiums. Buy (274p). Cable-assemblies maker Volex “has put its house in order and profits have responded”. Hold (189p).

Investors Chronicle

Derwent London “was one of the few commercial property groups to increase its dividend in the wake of Covid-19”. A solid balance sheet allows it to shrug off “short-term pain on rent collection”. Buy (310p).  

Shares

Inspecs, an Aim-listed eyewear-frame maker, offers an appealing “growth story”. People will be rushing to catch up on eye appointments now that lockdown has lifted and there are still 2.6 billion people worldwide who need their vision corrected. Buy (230p). 

Recommended

Cryptocurrency roundup: Putin backs crypto-mining, and spoof McDonald’s coin takes off
Bitcoin & crypto

Cryptocurrency roundup: Putin backs crypto-mining, and spoof McDonald’s coin takes off

Saloni Sardana looks at the cryptocurrency stories that caught our eye this week.
28 Jan 2022
Are recession fears justified? Maybe it’s time to look on the bright side
Economy

Are recession fears justified? Maybe it’s time to look on the bright side

There's a lot to feel nervous about right now, and many people are worrying about an impending recession. But it's by no means certain, says John Step…
28 Jan 2022
Making money is about to get much harder
Investment strategy

Making money is about to get much harder

Soaring inflation, geopolitical risk, bubbly stockmarkets - getting a return on your investment is going to get much more difficult – but not impossib…
28 Jan 2022
How to invest in the chipmakers fixing the semiconductor shortage
Share tips

How to invest in the chipmakers fixing the semiconductor shortage

Last year’s chip crunch brought home how dependent the world is on these tiny pieces of silicon. Chipmakers are rushing to build new factories. Will t…
28 Jan 2022

Most Popular

Amazon halts plans to ban UK Visa credit card payments
Personal finance

Amazon halts plans to ban UK Visa credit card payments

Amazon has said that it is to shelve its proposed ban on UK customers making payments with Visa credit cards.
17 Jan 2022
Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022