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

CMC Markets 

(The Times) CMC Markets “has been one of the big winners from the Covid-19 crisis” as “bored Brits with savings” flocked to online trading platforms. Sales for the year to 31 March are set to reach £400m, exceeding expectations. CMC’s rally “has some way to run yet” as the market volatility it has been thriving on won’t end soon and the economic recovery is just beginning. New customers are unlikely to “ditch their trading accounts”. 511p 

Entain 

(The Daily Telegraph) “Investors are waking up to the fact that Britain’s gaming companies have a lot to offer their American rivals.” British firms have had a “head start” in developing technology necessary for online betting because until recently betting on sports and games was banned in the most of the US. Entain rejected a bid from an American firm earlier this year, but the company has proved it can expand on its own. Entain is undervalued and its new CEO looks “up to the task” of expanding the group. 1,529p

Croda

(Shares) Chemicals firm Croda is a “highly exciting stock”. Its “new-found expertise” in lipid nanoparticles, or LNPs, the fatty molecules used with drugs and vaccines to ensure the chemicals don’t get destroyed by the body and can enter cells, bodes well for the future. Only a few companies in the world make LNPs, which are crucial in mRNA treatments such as the Pfizer and Moderna Covid-19 vaccines. The growth potential “means investors should not get hung up on an apparently expensive valuation”. There are several mRNA vaccines in development. 6,354p

Three to sell

CVS 

(The Daily Telegraph) Veterinary group CVS’s shares have “galloped to a fresh record high”. But the stock now trades on over 50 times this year’s earnings forecasts. The balance sheet is healthy and the pet-care market remains strong, “but the rating now looks very full. Time to move on.” 1,806p 

Cineworld 

(Investors’ Chronicle) Cineworld reported its first-ever annual operating loss in 2020 – $2.26bn – as sales slumped by 80% to $852m. It comes as no surprise given lockdowns across the world shut cinemas and movie releases were postponed. Though Cineworld is banking on pent-up demand to shore up its balance sheet in 2021, it acknowledges that cinemas are unlikely to reach pre-pandemic capacity before 2025. The firm also struggled before the virus. In an effort to “justify the price discrepancy” between a cinema visit and a Netflix subscription (the former costs as much if not more than the latter) by refurbishing its sites, it “loaded the company with debt”. Post-virus demand alone “will not be enough to rescue Cineworld”. 106p

The Geo Group 

(The Motley Fool) The Geo Group is a real estate investment trust specialising in prisons, rehabilitation facilities, and immigration-detention centres across the US. The Biden administration has decided not to renew these operators’ government-service contracts, which will cost Geo 25% of its overall revenue. The company’s sales and net income for 2020 dropped to $2.35bn and $113m from $2.48bn and $166.6m in 2019. The group is now is generating less cash than it can pay out in dividends. Around $3bn of debt is another reason to avoid the stock. $7.05

...and the rest

The Daily Telegraph 

Full year results at soft-drinks group AG Barr “fell pretty flat”. Sales were down by 11% owing to lockdowns as increased consumption of Irn-Bru, Rubicon and Funkin at home was not enough to offset the loss of business from pubs and restaurants. But the firm has a solid balance sheet and hopes to return to the dividend list in the coming year. Hold (495p). Vaccine maker AstraZeneca is worth buying on weakness. Its “intelligent approach to researching new treatments”, its presence in China and “highly capable boss” all bode well (7,289p).

Investors’ Chronicle 

Biotech manufacturer Bioventix’s revenues for the six months to December were broadly flat, and revenue estimates for the new year “remain under review” given the disruption to the diagnostics industry amid the pandemic; resources were directed towards those affected by the virus. The murky outlook makes the stock a hold (4,175p)

Shares 

Specialist lender Arbuthnot Banking focused on growing its deposits in 2020 to avoid “contagion from the slowdown” and the potential for a liquidity squeeze. Customers’ balances increased by 13% to £2.36bn, and the bank has been “de-risking” by cutting exposure to residential property. Buy (862p)

Motley Fool 

Cruise operator Carnival must wait several more months before “revenue-generating customers” board its ships. Analysts expect a 96% plunge in annual sales in the quarter to 1 March (1,707p). Electric-vehicle charging-kiosk operator Blink Charging makes $6.2m in sales but is worth $1.7bn. That makes no sense ($42.15). Avoid both.

Recommended

Which assets will benefit as the “jam tomorrow” bubble pops?
Investment strategy

Which assets will benefit as the “jam tomorrow” bubble pops?

With tech stocks, cryptocurrencies and many other “long duration” investments crashing hard, the “jam tomorrow” bubble looks to be bursting. John Step…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Guillaume Pousaz of Checkout.com: the surfer dude catching the fintech wave
People

Guillaume Pousaz of Checkout.com: the surfer dude catching the fintech wave

Guillaume Pousaz moved to California to pursue his love of surfing, and landed in Silicon Valley. He then rode the fintech gold rush to a multi-billio…
23 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022