Share tips of the week – 23 July
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) Equals Group, the global payment-services company (products range from international payment facilities to multi-currency cards) posted year-on-year sales growth of more than 20% for the first six months of 2021. The positive figures came “even without a meaningful recovery in travel-related foreign-exchange revenues”, which made up under 5% of group turnover compared with 30% historically. This shows how much the firm has diversified since the start of Covid-19. Growth was mostly driven by the Equals Money division, a payments and expense-management system for corporate customers. 48p
(This is Money) Hydrogen is quickly turning into one of the strong players in the clean-energy game. Clean hydrogen, which is produced from water, is expected to comprise 10% of global energy in the long term, and demand is predicted to grow 20-fold over the next decade alone. HydrogenOne Capital was set up to meet the demand for cash this power source needs “and provide shareholders with juicy returns along the way”. The firm is listing on the stockmarket at the end of the month. Cofounders and “industry veterans” JJ Traynor and Richard Hulf are “starting small but hope to scale up rapidly, providing much needed capital to small... businesses”. An “attractive long-term buy”.
(The Daily Telegraph) The data and document-management systems specialist is returning to the dividend list, which suggests that it will profit from “a further easing of lockdown and a rise in economic activity”. There are some clear risks “should the government’s plans go awry”. The firm has a solid balance sheet, which should protect it if restrictions are reintroduced. 430p
(Barron’s) Synthetic biology is a very new technology, but it’s already drawing comparisons “to the internet of a generation ago”. The technology consists of programming the DNA of micro-organisms (such as yeast)with a view to producing things more cheaply and with a lower carbon footprint than through normal manufacturing. Amyris is one of the main plays in synthetic biology. The firm is the most advanced in its sector, projecting $400m in sales for 2021 and breaking even in earnings before interest, taxes, depreciation and amortisation (Ebitda) terms. Buy in now to cash in on the future. $13.50
Litigation Capital Management
(Investors’ Chronicle) Australia’s Litigation Capital Management is a provider of litigation financing. The firm has just entered its third major deal in the last seven weeks and the outlook remains “favourable” owing to the unstable market environment brought on by the pandemic, which has led to a jump in insolvencies, bankruptcies and restructurings. The firm’s “fast-growing” fund management business also looks set to enjoy a major boost; it aims to launch another $300m fund in the near future. Investors have “taken note”. 121p
(The Sunday Times) The easing of restrictions worldwide means big events are back on, which presages a rebound for this international conference and exhibitions organiser. The second quarter was its busiest since the start of the pandemic as restrictions begin to ease in Russia and China. Hyve has held 28 events so far in 2021, but usually it puts on around 130 a year. The firm has expanded its online presence thanks to the acquisition of a digital-networking platform that held over 80 online events in the first half of 2021. 121p
...and the rest
The Motley Fool
Kimberly-Clark has boosted its dividend for 49 years in a row, but it looks set to post “problematic” quarterly results today. The firm has also fallen short of profit targets in two of the last three quarters, and analysts’ earnings estimates have been dropping in recent months. The firm profited from people stocking up on paper towels, tissue papers and disposable nappies during Covid-19, but that boost is over now. Avoid ($139).
Online fashion group Asos has announced a joint venture with US retailer Nordstorm, which will accelerate the growth of both the Asos and Topshop (which Asos acquired earlier this year) brands. Nordstorm is investing in all the labels Asos acquired from Arcadia, which will “leverage Nordstrom’s brick-and-mortar presence in the US”, with the launch of selected Asos brands on the retailer’s website and in “high-impact” locations. Buy (4,475p)
The Mail on Sunday
Tate & Lyle’s shares have dropped by 10% in two months. “The decline seems unfair.” Chief executive Nick Hampton has announced the sale of 50% of the company’s corn-processing subsidiary so he can “scale up the fast-growing ingredients business”. Investors have complained about the business for years. Existing investors should hold; new ones should buy (729p).
Pub operator Fuller Smith & Turner is set to bounce back with the easing of restrictions. Like-for-like sales reached 76% of 2019 levels in the 12 weeks to 3 July – but new Covid-19 variants are still a concern, so hold for now (860p).