Share tips of the week – 22 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) Despite governments’ plans to pursue a “green agenda”, recent spikes in oil and gas show that demand for these fuels persists, and it’s only expected to increase over the coming years. Advance Energy seeks to profit, targeting pre-existing oil fields that are underdeveloped or underfunded. A key current project is Buffalo-10, a site that produced oil for several years but never reached full potential. Analysis suggests it contains up to 34 million barrels, and if the drilling programme starting next month confirms that, “it will be a game-changer for Advance”. At the current price, the company is “definitely worth a punt”. 3.3p
(The Sunday Telegraph) Online retailer Asos has been hit by the supply-chain turmoil. Shipping costs and delivery delays could cause profits to drop by over a third this year. But the company will “find a way through these problems”. The key issue is increased demand, not faults with its fashions or marketing, so there shouldn’t be permanent damage. Profit margins will be affected, but analysts expect it all to die down over the next six months. Those who invest should accept that there could be no good news for the next six months or so. Still, the shares have lost around 50% since July, which makes them worth buying. 2,394p
(Barron’s) Gene-therapy firm MeiraGTx Holdings’ shares have halved since 2019, which presents an opportunity. The company has several treatments in clinical trials and “a deep pocketed partner in Johnson & Johnson”. It also claims to have technology that could change the face of genetic medicine by regulating the artificial genes that gene-transfer therapies place in patients’ cells. This could be a good time for risk-conscious investors to buy. $13.60
Three to sell
(Shares) Teamviewer, which listed in Germany in 2019, makes remote-access and remote-control software that facilitates the maintenance of computers and other devices. It admits that its latest quarterly update was “very disappointing”. The company benefited from the pandemic as people worked from home, but fewer than expected customers have renewed their contracts. Investors should cut their losses “and walk away”. €15.20
(Investors’ Chronicle) Fashion and homeware retailer N Brown “has not enjoyed the pandemic boom experienced by other digital business”. Its full-year results for the 12 months to May revealed the loss of half a million active customers and two million fewer orders. It seemed to be recovering in its half-year results to the end of August, but now Allianz Insurance has filed a £30m claim plus interest over payment protection insurance (PPI) sold to customers by retailer JD Williams, an N Brown subsidiary, and has estimated the value of a further element of the claim at up to £36m – “significant amounts given the group’s bottom line”. Sell. 51p
(The Motley Fool) Shares in German multinational travel and holiday group Tui have ticked up as the world has gradually reopened. But despite a promising recent rise in bookings, the outlook remains uncertain. Further travel restrictions cannot be ruled out, while Tui’s debt pile is worrying, given that it had to borrow “to keep the lights on” when Covid-19 appeared. Relatively high fixed costs make it hard to bolster profitability. Investors should steer clear for now. 250p
...and the rest
Insolvency and business advisory firm FRP Advisory should benefit from an increase in insolvencies as the government ends pandemic-related solvency restrictions. Around 33% of small companies have debt levels of more than ten times their cash balances, compared with 14% before the pandemic, which bodes well. Buy (124p). Microchip tech firm ASML is the only company in the world with the machines chip giants need to make the “smallest and most sophisticated microprocessors”. Buy (€634.9).
The Daily Telegraph
Shares in lung-scanning specialist Polarean more than halved last week when the US Food and Drug Administration (FDA) opted not to authorise its equipment for patient use. The company seems confident in its ability to address the issues pointed out by the FDA and will resubmit. It has a “very exciting product” and a comfortable amount of cash to see it through this process. Hold (64p).
Crawley-based manufacturer of ventilation products Volution has profited from the pandemic as people become more aware of “indoor air quality”. Results for the year to 31 July revealed a 22% increase in organic sales growth and a 69% increase in adjusted operating profit. Hold (475p). Wallpaper and fabric maker Sanderson Design has undergone “significant changes” in the last 18 months. It was formerly known as Walker Greenbank. The company has streamlined its product lines and scaled back inventory to £19.4m, compared with £28.8m two years ago. The group is now sleeker and simpler. Investec has a target price of 215p. Hold (200p).