Share tips of the week – 5 November
MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
Five to buy...
(The Sunday Times) Speedy Hire has expanded under CEO Russell Down. In addition to supplying heavy equipment and aerial platforms to big construction companies, it has begun providing DIY tools that are now stocked at 20 B&Q stores. That number is set to double in the next few months. Speedy Hire has been promoting its green credentials, switching its vehicles to electric or hydrotreated vegetable oil-powered engines. Sales in August were up by 4% from the same month in 2019; in the 12 months to the end of March the group reported £363.6m in sales and a pre-tax profit of £12.3m. Nonetheless, the shares look undervalued. 64p
(Investors’ Chronicle) IT company Softcat provides software, hardware and IT services. It has benefited from the switch to home and hybrid working. Supply-chain disruptions are unlikely to be an issue for Softcat, as it is one of the biggest companies in its sector and enjoys a very strong relationship with vendors. Before the pandemic it had a “great growth... record”; operating profit nearly doubled in the four years to July 2022. Hybrid working seems here to stay, which will increase the need for quality IT infrastructure. The latest profit forecast sent shares down 5% after the company announced an increase in costs. This is a buying opportunity. 1,892p
(Shares) Chrome and platinum group-metals (PGM) miner Tharisa has announced an increase in production and an improvement in margins, which “should act as a catalyst for the shares”. The company produces its metals from the Tharisa mine near Johannesburg, which is 74%-owned by the company, with the remainder owned by the local community. Tharisa accounts for between 10% and 12% of the 80% of chrome supplied by South Africa to China. The company has been affected by the fall in chrome and PGM prices owing to supply-chain problems, but strong fundamentals for the metals should support prices once these issues abate. 132p
(The Motley Fool) Video-game developer Zynga’s games reach users in 175 countries worldwide. Its most popular games, FarmVille and Zynga Poker among them, have been downloaded over four billion times. Investors are concerned that the group’s progress will slow as Covid-19 restrictions ease and people play fewer games. But these fears may be exaggerated: Zynga’s products can be played from anywhere without the need for a console. The company expects sales for the third quarter of 2021 to reach $665m, a 32% increase year-on-year. The stock is trading at $7.40, near its 52-week low, but the company could surprise investors with its earnings report.
Fuller Smith & Turner
(The Daily Telegraph) Fuller, Smith & Turner is best known for its (now sold) brewery in west London, but it has diversified. It manages a large number of pubs and runs several hotels, usually located in towns and rural areas in the south of England. Last year pubs and hotels were forced to close: sales fell by 77% in the year to March. But reopening “means there is some momentum in the business”. Sales at managed pubs from mid-July to September 18 were just 14% lower than in 2019. Although it’s still unclear how staff shortages and cost pressures will affect the company, the shares are “an opportunity for contrarian, risk-tolerant portfolio builders”. 650p
...and the rest
Bloomsbury Publishing’s sales have jumped now that the run-up to Christmas and the new academic year have both begun – despite problems in book printing and transportation. The second half “could be less rosy” owing to supply-chain issues, but the firm is looking to diversify and expand into “the world of digital academic products”. Hold (360p). Hotel and restaurant group Whitbread “had a brutal pandemic”. Easing restrictions have boosted trading and occupancy rates, but broker Peel Hunt does not expect a return to profit until 2023. Stay “cautious for now”. Hold. (3,242p)
The Daily Telegraph
Admiral’s shares have lost 5% since March, but “nothing has fundamentally changed”. Its prices and great service have attracted over 500,000 customers over the last 12 months, and numbers for the first half of 2021 were strong. Hold (3,047p).
Camber Energy “became a Reddit favourite” owing to rising energy prices and its low stock price. The shares duly jumped, but then short-seller Kerrisdale Capital “came out with a scathing short report” alleging that the company’s transition to clean energy “was built more on hype than substance”. The stock dropped from $4.85 to $1. Avoid.
Toilet roll, tissue and kitchen-roll maker Accrol’s share price has suffered lately, but this is due to “external factors”, such as the HGV-driver shortage and rising raw-material prices rather than internal ones. The company retains its “exciting longer-term growth potential” and should benefit from the recovery as the pandemic ebbs. Buy (38p).