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

Kingfisher

(Mail on Sunday) B&Q and Screwfix-owner Kingfisher had an “extraordinary” 2020. The DIY group has benefited from “our desire to make the same four walls look nicer”. But the firm owes its success to more than the lockdown boom: CEO Thierry Garnier’s five-year plan has focused on improving performance in France, a key market, cutting some costs and investing in its digital presence. Turnover for the year to 31 January 2021 was up by 7.2% to £12.3bn and pre-tax profits grew from £103m in 2019 to £756m in 2020. The firm’s cash pile is “reassuring on the dividend front”, and its long- term strategy “seems to be paying off”. 325p 

Ford

(Shares) Ford’s investments in electric and autonomous vehicles are yielding positive results. As activity recovers after the pandemic the car maker “should see increased sales for its cars and pickup trucks”. The group is suffering from the impact of the global semiconductor shortage, which could see earnings drop by $1bn to $2.5bn. But with a “clearer electric-vehicle strategy” the firm looks well prepared for the future. $12.85

Kenmare

(Investors’ Chronicle) Mozambique-based miner Kenmare Resources had a difficult year, but the firm has nonetheless managed to maintain its dividend. Production for the year was down by 15%, but higher ilmenite (a mineral-rich sand) prices “helped the bottom line”. Debt has risen sharply but the firm’s relocation of its WCP B plant was also the final step in a “multi-year growth programme” that should yield positive results. 407p

Three to sell

Genel Energy 

(Investors’ Chronicle) Kurdistan-based oil company Genel Energy saw its sales more than halve in 2020. Cashflow slumped to $4m from $99m in 2019. Production is set to stay flat at around 32,000 barrels of oil per day. The firm has previously struggled to get paid by the Kurdistan Regional Government and is still owed around $159m of oil sales, “equal to its entire 2020 revenue”. Profits were further harmed by a $320m impairment. All this adds up to a sell. 187p 

Manchester & London

(The Daily Telegraph) The Telegraph tipped Manchester & London in 2017 when it switched from “largely British shares to a growth-focused fund” containing big tech stocks such as Amazon, Facebook and Alphabet. It has performed strongly over the last three years. But now a “basket of stocks” that should have returned 32% over 2020 only yielded an 8.4% gain. This is because the trust sold call options on the shares it holds, limiting overall returns. This approach has complicated “what should be a straightforward investment rationale”. The argument for the trust “no longer holds”. 586p 

In The Style 

(The Sunday Times) Online fashion retailer In The Style listed on Aim this month. It made a £2m profit on sales of £35.4m in the nine months to January 2021. FounderAdam Frisby ascribes last year’s growth to the firm’s “switch from selling dresses to lockdown-friendly jogging bottoms”. But it remains to be seen whether recent growth will “outlive the pandemic... Investors should wait for evidence [that it] isn’t just a passing fad.” Avoid. 235p

...and the rest

Investors’ Chronicle 

“Pent up demand” by homeowners spending their savings on improvements helped offset the lockdown-induced downturn at LED-lighting manufacturer Luceco. It looks “well positioned” for the recovery. Buy (266p). Speciality chemicals and personal care business Elementis “posted a predictably downbeat set of results after a pandemic-ravaged year”. Sales in its core divisions, personal care and coatings, fell by 9% and 7% respectively. The group also needs to reduce debt. “We remain cautious for now.” Sell (121p)

Shares 

Data services group Relx has seen its shares fall behind “since the market shifted its focus to cheap value stocks”. But the share-price weakness represents an opportunity. Relx’s focus on organic growth, coupled with an “excellent track record”, make it a good investment for the long term. Buy (1,757p)

The Daily Telegraph 

Record-low interest rates hit banks even before the virus. Lockdowns threatening customers’ solvency “make matters worse”. Sell Italy’s Intesa Sanpaolo (€2.30)

The Motley Fool 

Hydrogen fuel cells “are increasingly being made obsolete by lithium-ion batteries”, which doesn’t bode well for green-energy hydrogen companies such as Plug Power. The company has also said it will have to restate accounts for previous years. Avoid ($35). Revenue at Nokia declined by 6% last year and is set to fall again this year. Consumers are ditching Nokia’s traditional 4G network for 5G, “to which the company has yet to fully upgrade”. Avoid (€3.50).

Recommended

Britain’s ten most-hated shares – w/e 1 July
Stocks and shares

Britain’s ten most-hated shares – w/e 1 July

Rupert Hargreaves looks at Britain's ten most-hated shares, and what short-sellers are looking at now.
4 Jul 2022
Britain’s most-bought shares w/e 1 July
Stocks and shares

Britain’s most-bought shares w/e 1 July

A look at Britain’s most-bought shares in the week ending 1 July, providing an insight into how investors are thinking and where opportunities may lie…
4 Jul 2022
M&G offers a solid 10.1% yield – but future growth is uncertain
Share tips

M&G offers a solid 10.1% yield – but future growth is uncertain

Financial services group M&G has one of the highest dividend yields in the FTSE 100. But it’s a complicated company, and a tough one to analyse, says …
4 Jul 2022
We’re doing well on pensions – but we still need to do better
Pensions

We’re doing well on pensions – but we still need to do better

Pensions auto-enrolment has vastly increased the number of people in the UK with retirement savings. But we’re still not engaged enough, says Merryn S…
4 Jul 2022

Most Popular

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks
European stockmarkets

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks

Ray Dalio’s Bridgewater hedge fund is putting its money on a collapse in European stocks. It’s likely to pay off, says Matthew Lynn.
3 Jul 2022
UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022
Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022