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.
Five to buy
(Shares Magazine) With 90% of its revenue depending on the in-home market, the largest food and beverage company in the world has been an “undoubted winner” from lockdowns. In-home revenues were up by 7.1% in the nine months to September 2020; sales of its Purina pet-care products jumped by 10.6%. Still, Nestlé’s shares have lagged for the last six months, thanks partly to cheaper value stocks’ recovery. This is an opportunity to invest in a world-class business for the long term. 99p
(Mail on Sunday) Birmingham’s Headlam, the UK’s largest distributor of floor coverings, has grown steadily since its inception in the 1990s, investing in its transport network to make it as efficient as possible and building distribution centres nationwide. Figures for 2020 will “not be pretty”, with sales likely to be 15% lower and profits set to halve. But a recovery is expected for 2021, with sales jumping to £685m from 2020’s £609m and a dividend of around 13.9p likely; the payout is also set to increase to 18.9p for 2022. Consumers stuck at home boosted demand by 9% in the second half of last year, and further growth is expected, raising the prospect of an “attractive” dividend. 410p
(The Sunday Times) Despite the uncertainty of the last year, Dunelm’s chief executive Nick Wilkinson has “never been more confident about the future”. The home-furnishings retailer has proved popular with those opting for home improvement during the lockdowns: for the six months to 26 December 2020 sales were up by 23% year-on-year to £719.4m and pre-tax profits totalled £112m. Sales for the three months to March are expected to represent a 30% decline year-on-year, but that is “not too bad” given store closures. Shares in the company plummeted at the start of the pandemic, but have “largely revived”. Dunelm has “pivoted neatly” towards online sales and kept a handful of shops open for click and collect. Wilkinson’s confidence “looks nicely upholstered”. 1,255p
(The Motley Fool) Greatland Gold currently has six projects in Australia, but its Havieron deposit is “the jewel in its crown”. A collaboration with fellow Australian miner Newcrest, the venture has released a series of successful drilling results and demonstrates the potential for a vast mining operation. The company is still a “small, loss-making one”, with the stock taking a tumble after initial drilling at another site proved less successful than Havieron. But Greatland “leans from the unsuccessful ones”, and its partnership with Newcrest should make the “costly business of mining” easier. Despite the risks, Greatland has the potential to deliver. 2,475p
Hilton Worldwide Holdings
(Barron’s) Hilton makes a “credible investment case”. It is an asset-light group with a small number of owned hotels in its portfolio (it relies largely on franchise fees). It is also less tied to luxury brands, overseas locations and big cities than its rivals and thus “favourably positioned” to ride out the effects of the pandemic on the travel and hospitality sectors. The franchise is “extraordinarily well-managed” with “top-notch brands” set to reap the benefits of the recovery of the hotel industry. The company has taken a big hit from the pandemic and will post big losses for 2020. But as the vaccine gets rolled out and pent-up demand for travel kicks in, this “high-quality name” is worth buying and holding for the recovery. $110
...and the rest
The Daily Telegraph
Housebuilder Crest Nicholson’s full-year results suggest the stock will continue to perform well. Pre-tax profits came in higher than expected and the firm plans to return to the dividend list in the summer.
The housing market seems “well underpinned”, too.
The Mail on Sunday
Electronics company discoverIE specialises in complex sensors that ensure products are kept very cold. Its product is used for transporting the Pfizer vaccine, which must be kept at minus 70 degrees Celsius, worldwide. Shares have seen a steady rise over the past five years and should continue to gain ground. Buy. 712p
Vietnam Holding is a “little known” closed-end fund that holds a concentrated portfolio of small- to mid-cap companies in Vietnam. Vietnamese equities have outperformed indices in Asia over the past decade. Vietnam was also one of a “handful” of countries that posted economic growth in 2020. Business and consumer confidence remains high, which bodes well for equities. The shares are currently trading at a 19% discount to net asset value (NAV), but this bargain won’t last long. Buy (216p).
Eyewear frames designer and lenses maker Inspecs enjoyed a 26% jump in sales to $46.2m last year While that’s down from $61.2m in 2019 owing to Covid-19, the “essential status of opticians” means the
eyewear industry should calmly see out the pandemic. As restrictions ease, it will keep growing. Buy (333p). The acquisition of promising Arcadia brands by online retailer ASOS bodes well; it is expected to deliver a “double-digit return on capital” after a year. Buy (4,856p).