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

Changpeng Zhao: Binance founder undaunted by the crypto winter
Bitcoin & crypto

Changpeng Zhao: Binance founder undaunted by the crypto winter

Changpeng Zhao, the founder of controversial cryptocurrency exchange Binance, has been severely battered by carnage in the sector. But the future is b…
3 Jul 2022
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
Just how powerful is artificial intelligence becoming?
Tech stocks

Just how powerful is artificial intelligence becoming?

An uncannily human response from an artificial intelligence program sparked a minor panic last month. But just how powerful are machines getting – and…
2 Jul 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

Most Popular

Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022
The ten highest dividend yields on Aim
Income investing

The ten highest dividend yields on Aim

Rupert Hargreaves picks the highest-paying dividend stocks on Aim, London’s junior market for small and medium-sized growth companies.
29 Jun 2022