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.
Six to buy
(Shares) This business-services firm keeps companies ahead of red tape, working with clients across areas such as fire safety, air hygiene and compliance software. The potential market for these services is thought to be worth £6.8bn in the UK alone, with especially promising growth in areas such as employment law, HR and occupational health. Management has an ambitious three-year plan to double revenue to £500m and almost treble earnings before interest, taxes, depreciation and amortisation (EBITDA). Now looks a propitious time for investors to buy in. 790p
(Interactive Investor) This real-estate investment trust invests in logistics warehouses in continental Europe, with sites in Germany, Italy, Spain and the low countries. The e-commerce boom means that many warehouse firms now trade at a premium. However, EuroBox trades on a small discount to net tangible asset value, perhaps simply because it is less well-known by investors. On a prospective yield of 4.2% this is one to “tuck away”. 105p
(Investors’ Chronicle) This industrial and electronic products supplier sells everything from “calibration instruments to personal protective equipment”. Its 1.2 million customers operate in diverse sectors ranging from healthcare to mining. A vast product range and digital sales channels leave it well-placed to consolidate a fragmented global market that is valued at approximately £400bn. Long a distributor, the group is expanding margins by moving into more profitable areas such as after-sales services. On a price/earnings (p/e) ratio of 20 the shares aren’t cheap, but this is an “acceptable” rating given the auspicious long-term growth outlook. 1,015p
The Hut Group
(Motley Fool UK) Shares in this e-commerce specialist soared upon flotation last September, but have since retreated. The Hut Group sells beauty and nutrition products online. These are fast-growing markets and The Hut Group complements organic growth with “shrewd” acquisitions. In 2020 revenues grew 40% on the year. The company is still loss-making, which makes it difficult to value, but “strong customer loyalty” and impressive growth prospects suggest there may be “significant upside” for the brave. 611p
(The Mail on Sunday) The global video-game industry generates annual sales of £125bn, eclipsing the film business. This developer has made 40 games and is a comparative minnow, but it has several “strategic advantages” that have helped it carve out a niche. Its game developers often live in eastern Europe, which keeps costs low. TinyBuild’s “intensely ambitious” boss, Alex Nichiporchik, is a master at using social media to drum up sales. A close connection with fans also enables the business to spot trends such as mobile gaming early. The shares could “go far”. 255p
(The Times) Last year was a predictably “torrid” one for this office landlord, which reported its first loss since the financial crisis. Management has halved the dividend; the share now yields 2%. The group operates in the flexible office-space market, with 3,000 mainly small clients in London. This flexible office model, which avoids the commitment of long leases, may be just what companies need as they gauge how much space they will need post-pandemic. Workspace’s niche could prove profitable if the future of offices turns out to be “flexible”. 883p
...and the rest
The US is rebounding so it’s party time in Las Vegas. That’s good news for hotel and entertainment operator MGM Resorts International. Excitement about reopening means the shares are not cheap, but add in the growing digital arm and they could have further to go ($42.23).
Road safety-barrier supplier to zinc galvaniser Hill & Smith is reaping the rewards of restructuring, with sales up by 10% during the first third of 2021 compared with a year before. Infrastructure investment in the US could yet drive a share price rerating. Keep buying (1,534p). Spirit drinkers in central and eastern Europe increasingly prefer premium brands, so buy Stock Spirits, which operates mainly in Poland, the Czech Republic and Italy. On a 3.3% dividend yield and a prospective price/earnings ratio of 14.1, it trades on a discount to the European beverage-sector average (272p).
The Daily Telegraph
New Covid-19 strains mean that vaccines are no panacea; we also need better treatments for people who do get sick. Synairgen’s inhalation therapy could be part of the solution. This is a highly volatile and speculative play, but it’s worth a “small punt” (176p).
Pennon Group is now a pure-water play “cash cow”, having sold its waste-management division, Viridor, last year. The trouble is that it is not a particularly promising play for income seekers. A dividend yield of around 2% and a share price that has flatlined since the Viridor sale suggests “there are better... prospects elsewhere”. Sell (1,088p).