Share tips of the week – 15 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 Mail on Sunday) Tesco is capitalising on the lifestyle changes brought about by the pandemic: online sales are up by 74% compared with a year ago. Its interim results for the first half of 2021 revealed overall revenue is up by 8% from pre-pandemic times. The company is trying out new initiatives, recently launching a super-fast delivery service platform, Whoosh, which delivers groceries to users in under an hour. The supermarket has also identified £1bn of savings it can make if it streamlines operations. 270p
Euromoney Institutional Investor
(Shares) There are three reasons to buy media group Euromoney. It is “reaping the benefits” after a string of acquisitions and an increase in subscriptions to its data service. Profits for the year to 30 September will exceed expectations, which should fund future acquisitions and boost earnings growth. And finally, its events business should rebound as travel and social distancing regulations keep easing. 1,094p
(The Times) Engineering a patient’s blood cells to fight diseases such as cancer “sounds like science fiction”. But MaxCyte (listed both on Aim and in the US) has built machines that can carry the process out in a day. It makes money by securing deals with developers researching cell-therapy drugs. This stock is a way to invest in cell therapy “without taking a bet on a single drug”. It fell by 15% in the US after the Food and Drug Administration halted one of its partners’ clinical trials; MaxCyte is working with 13 other partners. This could prove a buying opportunity. 760p
Three to sell
(The Daily Telegraph) Trainline’s app allows users to buy tickets from any operator on one platform. The stock swooned after a review recommended that the rail network and the current “hodgepodge” of operating companies be unified under a new body, which would render Trainline’s app redundant. The stock has lost 26% since May and shows little sign of recovery. Investors can recoup losses faster with a “more promising stock”. Sell. 338p
(Investors’ Chronicle) Netcall produces software to help firms manage their telephone and messaging platforms. Its transition to a cloud business should improve profitability in the long term, but the market has become frustrated because it has been expecting faster growth for a company that is trading on a price/earnings (p/e) ratio of 53. “The pandemic should have been the optimal environment for a digital transformation business.” Sell. 80p
(The Motley Fool) Covid-19 stocks “have been on fire”, but they won’t all be winners. Clinical-stage biotech stock Ocugen has generated excitement recently after securing a commercialisation agreement with Indian drug developer Bharat Biotech for its coronavirus vaccine Covaxin. Billions of doses still need to be administered worldwide, so there’s “plenty of room for additional players” in the sector. But Covaxin’s market is limited. The agreement only covers the US and Canada, both of which have secured more than enough doses from other drugmakers. Despite the deal, it’s far from certain that Covaxin will “ever be necessary” in these countries. Avoid. $7.70
...and the rest
The Mail on Sunday
Hotel Chocolat’s results for the year to 27 June were “a box of delights”. Revenue was up by a fifth and it returned to profit after virus-related losses. The group is focusing digital sales and expanded in the US and Japan. The shares aren’t cheap, but “as chocolate connoisseurs will tell you, some things are worth paying for”. Hold (475p).
Royal Dutch Shell has benefited from the recent strength in the oil and gas markets. Gas accounts for around half of its total production, and it is the market leader in liquified natural gas. The stock also offers an attractive yield. Buy (1,642p). Serica Energy is another good way to invest in the gas market. It will profit from its North Sea gas production as domestic wholesale prices increase. Buy (224p).
The Daily Telegraph
Shares in Superdry have dropped by 39% from May, but the investment case “has got stronger”. The firm is “undergoing a proper turnaround” and is one of Europe’s most sustainable fashion brands: it is one of the world’s leading buyers of organic cotton and has the broadest range of vegan trainers. This bodes well as customers turn towards sustainable fashion. Buy (243p).
Wetherspoons suffered a record £105m loss for its financial year to the end of July, compared with its pre-pandemic profit of £132m. Pubs were closed for 19 weeks of the financial year, and restrictions didn’t help. There could be further lockdowns this winter and “the social habits of pub-goers [may] have been permanently altered”. Hold for now (1,042p).