Share tips of the week – 30 July

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

Tripadvisor 

Barron’s 

Online travel-reviews website Tripadvisor “has struggled to make the most of its hundreds of millions of users”, but a new travel-subscription service for $99 a year offering discounted hotels and other benefits “could rekindle interest”. The “fragmented market” of online bookings “is crying out for a strong aggregator”; enter Tripadvisor Plus. If it attracts ten million subscribers, that would generate $1bn in revenue and $500m of free cash flow –  and propel the stock above $100. $36.26 

Medica Group 

The Sunday Times 

The backlog of patients waiting for elective procedures is “likely to boost demand for Medica Group’s services”. The firm offers teleradiology to hospitals that outsource around 20% of their cases. It expanded last November with the €16m acquisition of Global Diagnostics Ireland, and it has also formed a partnership with Australia’s Integral Diagnostics. Sales for this year are expected to jump to £61.4m, up from £36.8m last year. “There is a good chance Medica will be in demand in the months ahead,” especially over the summer as NHS radiologists take a holiday. 175p

Gateley

Investors’ Chronicle 

Revenue is bouncing back at law firm Gateley, thanks chiefly to its property and corporate divisions. They have been buoyed by the stamp-duty holiday and rumours of a capital-gains tax hike, which has encouraged mergers and acquisitions. Profit before tax was up by 7.1% to £19.3m in the year to 30 April. The government is set to keep promoting housebuilding and banking work will increase this year too. 210p 

Three to sell

Sumo Digital

The Mail on Sunday 

Video-game developer Sumo Digital counts giants such as Microsoft and Apple as customers. It builds, tests, and designs games and recently began publishing its own titles, a “higher-risk but higher-reward” undertaking. Chinese internet giant Tencent “clearly believes” in Sumo; it has offered to buy it for £900m. A higher offer appears unlikely to materialise. Shareholders have benefited from Sumo’s growth, but cautious investors should sell now in case the deal turns sour. 495p 

Rio Tinto 

The Daily Telegraph 

Rio Tinto’s strong performance in 2020 was overshadowed by the firm’s destruction of two ancient rock shelters in Australia. The firm has apologised and scrapped plans to mine at “culturally sensitive” sites. But despite pre-tax profits of $15.4bn last year thanks to the rising price of iron ore, it remains risky. The share price ultimately depends on “how many roads, airports and bridges” countries, particularly China, whose demand is driving up iron-ore prices, choose to build. Tying investments to politicians’ decisions in another country “is a gamble pure and simple”. Avoid. 5, 926p

Focusrite 

Shares Magazine 

Focusrite “continues to mark record share-price highs”. The music and audio-products firm has raised revenue and profit expectations for the year to the end of August. Musicians have been forced to record at home during the pandemic, while podcasting is “booming”. But the global shortage of semi-conductors is making it difficult to meet rising levels of demand. This year’s earnings look set to decline as restrictions are eased. Take profits. 1,416p

...and the rest

The Mail on Sunday 

Frontier Developments is a leader in the multibillion pound video-gaming industry. It has millions of loyal fans behind it. A recent trading statement “caused consternation” due to “teething problems” with one of its new games. This share-price dip is a buying opportunity (2,500p)

Barron’s 

Wyndham Hotels & Resorts’ “tilt toward no-frills... brands” is working. Those “tiers of lodging” have recovered faster than more upscale ones. Meanwhile, Hilton Worldwide Holdings’ fortunes are tied to group and business travel, but the firm’s “asset-light” operating model – it relies on franchising and management fees instead of owning hotels – “provides some flexibility” and protection. At $69.80 and $125.26 respectively, both stocks are buys. 

The Daily Telegraph 

Doric Nimrod Air Three owns four Airbus A380s and leases them to Emirates, the airline. They have remained grounded throughout the pandemic, but dividends have continued to flow as Emirates is contractually obliged to make lease repayments. Hold (41p)

Investors’ Chronicle 

Recruiter SThree is benefiting from the rising number of job vacancies as firms seek to hire employees for permanent positions. Finances “are sound” and net cash sits at £47.5m, “marginally below” the level recorded at the end of the financial year in November. The shares aren’t too expensive, “but we remain on the sidelines”. Hold (462p). Vimto producer Nichols is a “well-run business” –  witness its ability to maintain a net cash position throughout a “uniquely challenging period”. But rising supply-chain costs could prove a problem. Hold for now (1,450p).

Recommended

Which assets will benefit as the “jam tomorrow” bubble pops?
Investment strategy

Which assets will benefit as the “jam tomorrow” bubble pops?

With tech stocks, cryptocurrencies and many other “long duration” investments crashing hard, the “jam tomorrow” bubble looks to be bursting. John Step…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Why GSK should turn down Unilever’s billions
UK stockmarkets

Why GSK should turn down Unilever’s billions

Unilever has offered GSK £50bn for its consumer division. But while the cash will be a temptation, the deal is not in the interests of shareholders or…
22 Jan 2022
Share tips of the week – 21 January
Share tips

Share tips of the week – 21 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022