Share tips of the week – 1 October
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
(The Sunday Times) Property-regeneration group Harworth is “regularly overlooked by investors”. But three directors recently bought £100,000 worth of stock. And Harworth’s emphasis on warehouses bodes well amid the rise in online shopping. The group intends to double its overall portfolio in seven years, building more warehouses while growing its property bank. The shares are still on a discount to the predicted value of the developments, so it might be worth following the insiders and buying. 178p
(Shares) Equals’ half-year numbers for the six months to 30 June exceeded expectations. The payment-services group’s sales increased by 23% to £16.9m, and adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) jumped by 128% to £1.6m. A “key factor” in its outperformance is Equals Solutions, a new multi-currency product aimed at larger corporations. It was only launched in June but has attracted new customers and strengthened its order book. In the third quarter it generated £1.2m, 13% of total sales. Expect solid revenue growth for the next two years. 64p
(The Daily Telegraph) Pent-up consumer demand post-coronavirus has “transformed” Next’s financial performance. The retailer has benefited from the “unleashing of savings”. Sales were 7.8% higher in the half-year to mid-July compared with the same period in 2019. It has also embraced online retailing: 71% of sales for the current year will be digital. It has significantly expanded overseas, with nearly a fifth of sales expected to stem from abroad this year. Its growth strategy has yielded extra cash, which will be used to cut debt and fund a second special dividend. A solid long-term bet. 8,178p
Three to sell
(The Motley Fool) There are two reasons to avoid Apple. It has the leading share of smartphone sales in the US, but that means it could struggle to grow iPhone sales significantly from a high base. Meanwhile, Democrats in the US Congress intend to pass a bill that will “almost certainly entail higher corporate tax rises”, from 21% to 25% at minimum. It’s a small increase, but with Apple’s sales and earnings per share predicted to grow by only 4% and 2% respectively in 2022, the tax could lower profits per share. $144
(Investors’ Chronicle) Lockdown restrictions and the trend towards “simple funerals” have all hurt funeral-provider Dignity. Deaths in the second quarter of 2021 were 4% below the five-year average; they were brought forward by the pandemic. Sales and underlying operating profits for the half-year to the end of June were down by 4% and 10% respectively from the same period in 2020. Another problem is that the Competition and Markets Authority’s December 2020 report into the funeral market pointed out that Dignity’s prices are significantly higher than its competitors’, which is likely to drive consumers to cheaper alternatives. 722p
Learning Technologies Group
(The Mail on Sunday) Learning Technologies Group (LTG) helps firms run training and evaluation courses. Demand fell during Covid-19 but sales and profits are now growing at double-digit rates as the economy recovers. LTG has just bought GP Strategies, a US rival, but it is inefficient and less profitable than LTG. The shares have risen tenfold in seven years, so investors should take profits “in case the US deal goes awry”. 221p
...and the rest
The Mail on Sunday
Consumer-goods wholesaler Supreme sells more than 1,000 products under licence to stores ranging from Home Bargains to Tesco. It’s also a leader in vaping, with 30% of the market. Its latest venture is “a foray into the world of vitamins and wellness”, for which sales are expected to hit £1bn this year. The “best is yet to come”. Buy (187p).
PensionBee, which allows people to combine all their pensions into a new online plan, is burgeoning: revenue more than doubled in the first half of 2021. Assets under management grew by 117% from the same period in 2020 to £1.99bn, with a retention rate of 95%. Hold (148p). PZ Cussons has benefitted from the pandemic as consumers “get their wallets out for hygiene products”. Its Carex brand comprises 36% of the British market. There are concerns this could change as we come out of the pandemic, but sales growth remains “encouraging”. A speculative buy (221p).
Alliance Pharma’s first-half results to 21 September reveal impressive global strength. Revenue for its consumer-healthcare division and prescription-medicines arm were both up by 12% year-on-year. This was driven by “the increasing propensity of Chinese customers to buy their health products online”. There is plenty of growth in prospect. Buy (104p).
The Daily Telegraph
Zytronic, a maker of touch-sensitive screens, suffered in the pandemic as people shunned contact. But its update last week showed that the group is “emerging from the doldrums”. It is back in the black and its strong balance sheet offers protection. Hold (175p).