Share tips of the week
Three to buy
(The Times) UK regulators might be “tightening their grip” on the sports-betting industry, but “the US is going the other way”. Flutter Entertainment is in “pole position” thanks to its FanDuel brand, which boasts a 40% share of the US online sports-betting market. “There are reasons to be cautious”: the firm is in the middle of a legal dispute with Fox Corporation over its purchase of a stake in Flutter. But despite its ongoing spat with the media conglomerate, the outlook is positive. 15,295p
(The Daily Telegraph) Investment platform Hargreaves Lansdown managed to attract 220,000 new customers last year, despite tarnishing its reputation by recommending Neil Woodford’s chronically underperforming fund. And “there is every reason to expect more customers to sign up”. With fewer workers benefiting from final-salary pension schemes each year, more must “save for their own future”. Only three million people use investment platforms in Britain, so there is still plenty of scope for growth. The stock has lagged owing to the “lingering association” with Woodford. 1,659p
(The Mail on Sunday) The climate action movement “is gaining momentum” and Foresight Group looks well placed to benefit. The asset manager “shifted towards renewable energy” stocks 15 years ago and now operates 33 funds, which own 300 infrastructure projects “capable of powering nearly two million homes with renewable energy”. Assets under management rose by 60% to £7.2bn in the year to 31 March. The shares are an appealing long-term buy. 425p
Three to sell
(The Daily Telegraph) HSBC “faces a daunting list of challenges”, from “rock-bottom” interest rates to “walking the tightrope” between Western investors’ ethical concerns and a Chinese government “with radically different priorities”, a task that will only become more difficult. In the future the business could split between a “giant Asian bank headquartered in Hong Kong” and a smaller one based in the UK. That could be a suitable investment in the future, “but there are an awful lot of challenges to overcome first” and “a lot that could go wrong”. It’s a sell for now. 419p
(Investors’ Chronicle) Construction specialist Kier is dealing with a debt burden that jumped by almost 50% in 2020; it is to raise between £190m and £240m of equity in the next few weeks. Kier is hoping that “government rhetoric around boosting infrastructure spending” will help it achieve its revenue and profit goals for the year. But considering the “competitive challenges” that stand between the firm and its revenue targets as well as the “ultra-thin margins associated with the sector”, the shares do not seem compelling. Sell. 90p
(Barron’s) “Space tourism pioneer” Virgin Galactic’s business model looks risky: it’s uncertain how attractive commercial space travel will be. An accident is also a risk. Any “catastrophic failure by any provider could have a crushing effect on demand for all”. Sentiment might begin to shift if the company successfully launches commercial operations in 2021, but for now its future looks too uncertain. Avoid. $26
...and the rest
PureTech Health’s operating loss narrowed by 12% last year and its pipeline looks attractive. The biotech group is starting at least ten new clinical trials this year and is sitting on $443m of cash, enough to fund its operations until 2025. Buy (416p). Associated British Foods’ Primark stores enjoyed a surge in sales when they reopened on 12 April. But the high-street retailer is “still reeling” from the past year, and ABF has lost £3bn in sales and £1bn in profits in 12 months, although it has reintroduced its dividend. Hold (2,390p).
The Mail on Sunday
Solar power was the fastest-growing form of electricity generation in America last year, which bodes well for US Solar Fund. It runs 42 plants, generating enough energy for over 90,000 homes, and “should benefit from governments’ increased support for all things environmental”. Buy ($1.03).
Extracts and ingredients manufacturer Treatt posted a strong trading update in mid-April, saying it expected to grow its first-half sales by 14% while also improving its margins. Growth in the tea, health and wellness, and fruit and vegetable categories has been strong and should endure thanks to growing global demand for healthier living. Buy (1,145p). Small-cap oil and gas company Touchstone Exploration says one of its wells has “yielded a significant natural gas discovery”, which has given the shares a fillip. There is “scope for further upside”. Buy (102p).
The Daily Telegraph
Volex makes cable assemblies for medical equipment, electric vehicles and data centres. Sales for the year to 4 April will reach at least £440m, up from £391m the year before. Hold (343p).