Share tips of the week, 25 June
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
Lennar
Barron’s
Lennar is one of America’s top homebuilders, and it looks poised to benefit from the country’s “severe shortage” of housing. Lennar reported strong quarterly results last week, showing that demand remains robust. The company also operates a house-rental business and will benefit from the increase in people leaving apartments for more spacious homes. On a price/earnings (p/e) ratio of just eight, this is a “multiyear opportunity”. $98
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sage
The Daily Telegraph
Renowned fund manager Terry Smith has sold his fund’s stake in this business-software group, but it has “a bright future”. The firm is transitioning from selling its software as a one-time purchase to providing it as a service hosted in the cloud. The shift “requires investment”, but after a year or two investors “will have recouped much of the shortfall” and be left with a “smoother, more reliable long-term revenue stream”. A dividend yield of almost 3% will pay them to wait. 677p
Palace Capital
The Mail On Sunday
Commercial-property companies were “shunned” when the pandemic first hit as investors worried that tenants would be unable to pay their rent. But the fall in Palace Capital’s shares looked “unwarranted” and there should be plenty of gains ahead. The company is run by “experienced hands”. It collected 95% of the rents owed in the year to March 2021, and increased its final dividend by 20% to 3p. It says shareholders will receive at least 12p for this financial year. This “reflects confidence”. As the economy recovers so will the stock. 260p
Three to sell
WHSmith
Investors’ Chronicle
WHSmith’s shares have bounced amid investors’ growing confidence thanks to the successful vaccine rollout. But the stock’s rise is also based on “extremely forgiving” earnings estimates focused on “past glories”. The current valuation “fails to take proper account” of the “huge” uncertainty surrounding sales’ recovery over the next few months, which is why investors “would be better off getting out now”. 1,755p
Farfetch
Morningstar
Farfetch is an online platform that sells personal luxury-goods. The firm connects luxury buyers and sellers without exposing itself to unsold inventory risk. But it is a small company, with only a 3% share of the online luxury-goods segment, and it reaches less than 1% of the luxury-buying population. Analysts believe the online luxury sector will be dominated by a small number of strong global players, and though Farfetch could become one of them, it is still too young and risky for investors to take that bet now. Avoid. $49.67
Naked Brand
Investor Place
“It was a given” that Naked Brand, an online apparel and swimwear business, “would go belly up” until Reddit day traders “changed the equation”. Posts encouraged users to buy NAKD stock, leading to a massive bounce. The firm is pursuing a digital transformation that involves selling its flagship brand and “making hay while the sun shines”. But the company has vastly increased its shares in a short amount of time, from 29.4 million after a $50m offering in January to 476 million. “That kind of dilution is not something stockholders will like.” Longer-term, investors should avoid the group, despite what Reddit traders say. $0.63
...and the rest
The Daily Telegraph
Insurer Admiral boasts an “entrepreneurial culture”, consistent profits and a “high but sustainable” yield of 3.7%. Buy (3,201p). Patents specialist RWS is a market leader in helping businesses protect their intellectual property (IP). It is “well managed”, and the economy looks “sure to rely ever more on IP”. Buy (557p).
Shares
Industrial-equipment rental group Ashtead doesn’t look cheap and offers a “modest” yield of 1%. But the firm’s dividend-growth track record is “exceptional”; it maintained its progressive dividend policy throughout the pandemic. Buy (4,985p). Fevertree Drinks is also a buy, having increased its dividend by 38% over the last six years (2,558p).
Investors’ Chronicle
Iron castings and machining specialist Castings was hit by a slump in demand throughout the pandemic and although it is now back to full production, there is still considerable uncertainty ahead. The global semiconductor shortage, moreover, does not bode well for the group, which is heavily reliant on the automotive industry. Hold (382p).
Motley Fool
Office furniture maker Steelcase was hurt by the pandemic as people worked from home, and this market “will take a lot longer to bounce back” than others. Avoid ($14.24). New bitcoin investment vehicle Osprey Bitcoin Trust offers a low-cost way to gain exposure to bitcoin. But it is trading at a “big premium” to its underlying assets, and with rival and much larger alternative Grayscale Bitcoin Trust on a 14% discount to net asset value (NAV), it is best avoided for now ($13.12).
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Which investment trusts could benefit from lower interest rates?
As vehicles for long-term investments, many investment trusts were hit when interest rates rose in 2022. With interest rates expected to fall by the end of the year, could now be the time to invest in one of these unloved sectors?
-
How to protect your personal and financial data from cyber attacks
M&S and the Co-op are the latest retailers to suffer from cyber hacks but consumers also need to be vigilant
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?
Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
'Technology will determine tomorrow’s top stocks in emerging markets'
Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airports
Most investors can’t get their hands on airports. Here are two ways you can
-
Three British mid-caps that could make 'attractive' investments
Opinion Charles Luke, manager of the Murray Income Trust, highlights three UK-listed mid-cap companies, as he tells us where he'd put his money
-
Fat profits: should you invest in weight-loss drugs?
The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategy
Ramsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance market
The insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton