Three to buy
McCarthy & Stone
(Interactive Investor) A private-equity bid for this retirement-home builder and manager presents a speculative buying opportunity. Lone Star’s 115p per-share bid is clearly a “low-ball”, but it has been backed by the board. If shareholders manage to block the deal, then the long-term outlook is positive. The number of elderly people will double by 2050 and the market for retirees keen to downsize is “red-hot”. A better offer might yet emerge, and even if it doesn’t, the firm’s net asset value limits the downside. 115p
Shaftesbury
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(Investors Chronicle) In a normal year, 200 million people visit London’s West End, but in 2020 the capital’s streets are far quieter. That has hit business at this real-estate investment trust, which has seen rent collections fall as tourists have steered clear. The shares are down by more than 50% this year, but trading on the biggest “discount to net asset value (NAV) on record” they could offer long-term upside. Iconic property in the likes of Carnaby Street and Covent Garden will always have the cachet to attract new tenants. A buy for the risk-tolerant. 467p
United Utilities
(The Mail on Sunday) It is getting harder to find refuges from the dividend gloom, but people still need water. United Utilities is the UK’s largest listed water group. The shares should yield a more than 5% this year. The greatest threat to the industry is regulation, but a deal with Ofwat gives visibility about pricing until 2025. And action against Ofwat from other water companies means prices could be set to rise in the medium-term. A “long-term buy”. 863p
Three to sell
Land Securities
(The Motley Fool UK) A new wave of lockdowns is “a catastrophe” for the likes of this retail-property investor. “Landsec” collected just 62% of net rent due by the end of September within five working days, compared to 95% the same time last year, as its shopping centres and retail parks felt the Covid-19 pinch. The share price is down 45% this year and the yield is an attractive 4.2%, but income-investors shouldn’t bite. The rise of e-commerce creates long-term headwinds for physical retail that were apparent before the pandemic struck. 508p
Burberry
(The Sunday Times) Covid-19 has dealt a blow to Burberry’s planned renaissance under designer Riccardo Tisci. Revenue plunged earlier this year thanks to the first-wave lockdowns. Management says that investors must wait for “a resumption of overseas travel” before sales return to pre-pandemic levels. For now, the temptation is to offer more discounts but that brings lower margins and is always a risky move for a luxury brand. The group’s balance sheet and cashflow remain robust, but with shops now closing again, investors should steer clear lest they become “a fashion victim”. Avoid. 1,352p
BT
(The Sunday Telegraph) As a one-time telecoms monopoly with control over the broadband network, BT was ideally placed to capitalise on the information age. But a lack of focus has dashed hopes. The group has chopped and changed its mobile networks, attempted broadcasting and dabbled in overseas expansion. Management promises a new strategy, but a company’s culture is hard to change and the record of value destruction speaks for itself. Avoid. 101p
...and the rest
The Daily Telegraph
Shares in Regional Reit are trading close to their March nadir, but the property trust has collected 96% of rents and is tilted towards “essential industries”. For all the risks, income-seekers should take a look for the generous potential dividend (60p). Ruffer Investment Company is a trust to buy for those seeking an “insurance policy” against rising inflation (243p). Shares in cybersecurity play GB Group have soared, but a resumption of dividends presages further momentum. Hold (865p).
Investors Chronicle
Consumer credit-reporting firm Experian is applying its sophisticated data knowledge to ever more business areas, making it a “long-term, structural growth story” that more than justifies its rich valuation (2,970p).
The Mail on Sunday
South west-focused Pennon Group is another resilient water utility and yields just over 2%. The stock is a “solid hold” (993p).
Shares
Natural extracts and ingredients specialist Treatt is a top-quality operator that stands to gain from the growing trend towards health products (607p). Three-year-old Blue Whale Growth is a global growth fund whose strong performance means it won’t stay “under the radar” for much longer – buy (176p). The Coca-Cola Company is a “compelling recovery” stock so it’s worth “staying sweet”. Keep buying ($49.80).
The Times
“Upmarket wealth manager” St. James’s Place has struggled of late but management has acknowledged past mistakes. An ageing population bodes well for its financial planning services. Buy (925p).
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