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.
Six to buy
(The Daily Telegraph) Demand for electric cars has “soared” in the pandemic and is expected to grow further as the UK’s 2030 ban on petrol cars moves closer. So consider Halfords, which has invested heavily in an “electrified future” for the automotive industry, purchasing technology to service electric cars and training staff, which could give it a “competitive advantage” over smaller garages. It’s also counting on rising demand for electric bikes and scooters. It has invested in its online presence and digital sales rose by 76% in the latest quarter. 315p
(The Mail on Sunday) CentralNic provides companies with software that allows them to create an online presence via websites and email marketing. The group operates worldwide and shares recently jumped after boss Ben Crawford revealed a 121% surge in sales in 2020 as firms rushed to make it as easy as possible for customers stuck at home to buy online. Though some investors may be inclined to take profits, the company looks set to continue at its current pace. It should keep delivering as more companies realise the value of a strong online presence. 81p
(Investors’ Chronicle) Covid-19 weighed on Rotork’s operating profit in 2020, sending it down by 6%. But the industrial-valve specialist says demand has “started to show signs of recovery”. The company relies heavily on the oil and gas sectors, and as things begin to open up it looks set to recover alongside the wider economy. Its net cash position currently stands at £178m, two-thirds higher than last year. The strong balance sheet should allow it to ride out the end of the pandemic. 372p
(Shares Magazine) Dotdigital is “a true software-as-a-service (SaaS) rarity” and its shares look poised to reward investors “handsomely” in the years to come. Its platform provides digital-marketing firms with all the necessary tools to design, create and monitor campaigns. In the six months to December 2020 the company produced organic revenue growth of 22% to £28.2m, and earnings before interest, tax, depreciation and amortisation jumped by 13% to £10.5m. Dotdigital “has certainly been a Covid-19 winner”, but its success is likely to extend “far beyond lockdown”. 170p
(Barron’s) Vertex Pharmaceuticals’ shares climbed by over 800% from 2012 to 2020. But in mid-October the company cancelled its development of a “once-promising drug” after disappointing trial results. The stock tumbled by 25%, which presents “an opportunity for investors to get back in”. The firm remains “a powerhouse in cystic fibrosis treatment” and its pipeline beyond the disease is also “coming into focus”. It is trialling sickle-cell, kidney disorder and Type-1 diabetes treatments as well as experimental pain drugs, all of which present growth opportunities. $208.44
(Interactive Investor) Rentokil reported an increase in sales of over a third in 2020 as its specialist-cleaning and disinfection products thrived during the pandemic. The result was the resumption of its dividend as profits rose by 4% to £355m. Overall revenue increased by 5% to £2.8bn, although sales at its pest-control business rose by only 1% as hotels, restaurants, schools and offices closed. Nevertheless, things should improve as the economy opens up. Long-term momentum seems to be “in the company’s favour”. 467p
...and the rest
Oil firm Lamprell’s foray into the renewable-energy sector has yielded encouraging results. But the group will be in the red until at least 2022 and there is “no dividend in sight”. Avoid (78p).
Power-converter specialist XP Power had a productive 2020, with profits jumping by nearly a third to £46m for the year as sales in semiconductor-equipment surged. The firm also expanded its manufacturing facility in Vietnam in 2019, which helped shield it from the impact of US tariffs on goods imported from China. Buy (5,400p). Precious metals miner Polymetal “kept things simple in 2020”, maintaining its cost level and letting profits “roll in” as gold prices rose. Buy (1,472p).
The Mail on Sunday
Shares in maps-software firm 1Spatial look set to increase as the company rolls out its growth strategy. The business has “a number of blue-chip customers” and its operations are expanding overseas too. The order book for forthcoming projects is “strong”. Buy (35p).
Supermarket Income Reit’s 4.5% return in the past year “may not... quicken the pulses”, but its forward yield of 5.4% looks attractive. The portfolio leans heavily towards supermarkets that can fulfil online orders, which has proved a winning strategy during the pandemic. Buy (110p). France’s Eurofins is a leader in pharmaceutical and cosmetics-laboratory testing. Its full-year 2020 results exceeded market forecasts and it has raised its 2022 and 2023 projections. The current share pullback owing to the “flight from quality” is the ideal opportunity to invest before the stock makes “new highs on the raised targets”. Buy (€75.29).