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
Five to buy
Daily Mail and General Trust
(The Times) Shares in this sprawling media group have been buoyant recently amid optimism over the forthcoming flotation of Cazoo, the “hotshot online car dealer” in which DMGT holds a $1.35bn stake. The group’s exhibition business
is still weighed down by reopening uncertainty, but the outlook for the publishing side is brightening. Known for mid-market and freesheet newspapers such as the Daily Mail and Metro, the group is now moving into more specialist titles, recently acquiring New Scientist magazine for £70m. Such “knowledge-based and comment-heavy titles... may prove lucrative in the digital future”. A healthy balance sheet gives it the firepower to continue expanding. Risk- tolerant investors may want to get onboard. 866p
(The Mail on Sunday) Research finds that over 80% of office workers want to continue working from home for at least part of the week. Businesses are also keen to promote the trend towards such “hybrid working”, given the potential cost savings from cutting back on office space. This IT- services group helps businesses digitalise services such as “desk management, meeting room bookings and visitor check-ins”. The group added 1,500 new accounts between March and June last year and growth has continued since. Although the company is currently loss- making, strong revenue growth should see it become profitable from next year. 145p
(Investors’ Chronicle) Despite the success of its vaccine, Pfizer’s share- price performance has underwhelmed over the past year. The Biden administration’s push to scrap Covid-19 vaccine patents may herald an era of tighter government regulation of the pharmaceutical industry. Pfizer was already facing a “patent cliff” in the middle of this decade as several key patents expire. But the gloom is overdone. The group’s emergence as a global leader in mRNA-technology opens the way to other therapies in the future, boosted by the Pfizer’s high spending on research and development. On just nine times 2022 earnings this could prove a “buying opportunity”. $40.12
(Shares) Aim-listed Supreme licenses and distributes batteries and lighting products as well as serving the nutrition and vaping markets. Its in-house 88vape brand is the UK leader in vaping “e-liquids”. It also leverages its “extensive retail distribution network” and design know- how to distribute products on behalf of other brands, including Duracell batteries and Panasonic. Business areas such as “nutrition and wellness” are experiencing strong growth, while the vaping market may be about to consolidate. On an “undemanding 14 times forecast earnings” and yielding a prospective 3.6%, this is a promising “growth and income play”. 188p
(The Daily Telegraph) For all the talk of a housing bubble, ultra-low interest rates, ongoing government support and population growth should keep the market chipper for the foreseeable future. This housebuilder has reacted to changing demand among consumers, shifting
its activity out of London as digital working encourages many people to escape to the country. On a lowly forward price/earnings (p/e) ratio of ten the shares trade at a discount to other firms in the sector and offer a “margin of safety” if things go wrong. 680p
...and the rest
Ongoing demand for Covid-19 PCR tests and the global semiconductor shortage mean Aim-listed science-kit specialist SDI Group still has plenty of growth potential. Buy (175p). Mr Kipling-cakes owner Premier Foods is enjoying a strong recovery and could attract takeover interest. “Keep buying” (112p).
Energy supplier SSE is investing in the UK’s renewable future of offshore wind farms and is also exploring carbon-capture and hydrogen technologies. That leaves it well positioned, while the 5% dividend yield is a reward for waiting. Buy (1,540p). Denmark’s Rockwool produces insulation products by “heating volcanic rock until it is liquid and then spinning it into fine threads”. The resulting product is non-flammable, long-lasting and also provides sound insulation. The shares aren’t cheap but there will be massive demand in the coming years as Europe invests heavily in renovating buildings (DKr2,929).
Theatres in the UK and US have reopened, but Cineworld’s shares are still down over the past year. Why? The problem is the debt pile, which “ballooned” during lockdowns to over eight times earnings before interest, tax, depreciation and amortisation (EBITDA). Ratios over two are seen as risky. Steer clear (92p).
The Mail on Sunday
Law firm Gateley’s focus on “mergers, acquisitions and property deals” seemed a lost cause when the pandemic began but the group has proved unexpectedly robust. This is an income stock with encouraging growth prospects (199p).