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.

Three to buy

CVS Group

(The Times) This veterinary chain saw its practices closed during the first lockdown, but business has rebounded. Total sales were up by 6.3% during the four months to the end of October compared with a year before and the second lockdown has been less disruptive. That has allowed it to reduce debt and grow its portfolio of 480 practices through “bolt-on acquisitions”. Add in rising pet ownership and the outlook is encouraging. 1,435p 

Rolls-Royce

(Shares) Shares in this aviation engineer have soared on hopes that a vaccine will soon have us all flying again. Rolls-Royce is part of an “effective global duopoly” with General Electric for civil aviation engines, an area that accounts for more than half of sales. The medium-term outlook for aviation is foggy, but Rolls-Royce’s more lucrative nuclear-power systems and defence divisions should keep profits buoyant. On a free cash-flow yield of 8.4% for 2022, the shares look “great value” for patient investors. 107p

VinaCapital Vietnam Opportunity Fund

(The Times) Vietnam has been a trade-war winner as the likes of Apple and Microsoft move manufacturing there from China. This fund buys both listed and private companies in the hope of delivering long-term capital growth. It is particularly exposed to domestic property and construction: a growing population and expanding infrastructure needs bode well for these sectors. An expanding middle class is also driving demand for financial services. The valuation is still attractive and a dividend yield of 2.3% is a final boon. 365p

Three to sell

National Grid

(The Daily Telegraph) National Grid should be “the perfect income stock”.Its customers can hardly switch to another provider, ensuring a predictable flow of revenue. But that is where the regulator Ofgem steps in. A forthcoming framework could “halve the regulated return” of the group between 2021 and 2025, although we will have to wait a few weeks for more details. Even worse, there are reports that the government is considering an outright breakup as part of its carbon reduction strategy. Even if National Grid dodges that bullet, lower profits will mean either a dividend cut or higher debt. The risks are too high. 881p

Kandi Technologies

(Barron’s) There’s a new kid on the electric-vehicles block. This Nasdaq-listed Chinese maker of vehicles and batteries has seen its share price roar this year, but it has been a volatile ride. The company is loss-making, but the upcoming launch of the K27, a “Mini-Cooper size” electric car, has unleashed speculative excitement. But beware. Imported compact cars have a long history of underperforming in the US (remember the fate of the Yugo in the 1980s). $12 

Palantir Technologies

(Motley Fool UK) Palantir, which listed in New York in September, builds software to help financial companies, carmakers and intelligence agencies to corral vast amounts of data. Full-year sales should eclipse $1bn, a 44% rise on last year. The problem is the price: on a price-to-sales ratio of 45 there is considerable downside. The fact that the founders have offloaded tens of millions of dollars of stock since the listing is also hardly reassuring. Avoid. $28

...and the rest

The Daily Telegraph

It would take a brave investor to bet against the “tidal wave of cash” heading into the renewable-energy sector. Utility SSE, which is working on the world’s largest offshore wind-farm project at Dogger Bank, looks well-placed to profit. Hold (1,361p). Shares in Covid-19 treatment and testing specialists Synairgen and Avacta have fallen back on the vaccine news, but both are set to adapt their expertise to other conditions. It’s a “speculative buy” (89p; 113p)

The Mail on Sunday

A strong first-half performance at cake chain Cake Box shows that consumers are finding a sugary way to beat the lockdown blues. The shares are up by 37% since July 2018. Some profit-taking may be in order, but shareholders should keep a stake: it makes sense to have some cake as well as eat it (188p).

Shares

New York-listed medical science firm Boston Scientific makes everything from pacemakers to catheters. Cancelled elective procedures have seen the shares stall this year, but there is now a backlog to clear. Rising margins and judicious acquisitions should also prove a tailwind ($33.33)

The Times

A DIY and renovation boom has driven “stunning” sales at B&Q and Screwfix owner Kingfisher. Further progress will depend on whether the housing market can hold up, but this is proving to be a successful turnaround story. Buy (271p). Trading at Greggs will bounce back swiftly next year but on 43 times forward earnings the shares are pricey – hold (1,799p). It will take more than a perkier oil price to make up for past disappointments at Tullow Oil. Avoid (32p).

Recommended

Share tips of the week
Share tips

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.
19 Feb 2021
Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Three of corporate Japan’s hidden gems to buy now
Share tips

Three of corporate Japan’s hidden gems to buy now

Professional investor Nicholas Price of the Fidelity Japan Trust picks three of his favourite Japanese stocks that he thinks the market has overlooke…
12 Apr 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
House prices: from boom to even bigger boom
House prices

House prices: from boom to even bigger boom

UK house prices have risen to new to record highs, says Nicole Garcia Merida. Demand continues to outpace supply, but continued low interest rates, th…
9 Apr 2021