Share tips of the week – 19 November
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
(Shares) Scientific-products maker SDI, whose offerings range from digital-imaging equipment to electrochemical sensors, has had “a very encouraging” recovery. It says it has enjoyed “very strong sales and profits” recently thanks to an unexpectedly good performance from Monmouth Scientific, which it acquired last December. The company looks set for multi-year growth. The shares have gained 23% in six months but there should be further to go. 216p
(Investors’ Chronicle) Budget carrier Wizz Air has struggled with the implementation of vaccine passports because vaccination rates in its key markets (central and eastern Europe) are lower than in the rest of Europe. However “there is hope of a rapid turnaround”: the percentage of Romanians who are fully vaccinated is expected to jump from 30% to 75% by February. The carrier reported improvements on last year for the six months to 30 September: ebitda reached €164m compared with an €81m cash loss in the same period last year. It has yet to regain pre-pandemic heights, but should continue to benefit from the travel rebound in 2022. 4,805p
(The Mail on Sunday) Lender group OSB floated in 2014 with a market value of £400m. Today it is worth over £2.25bn. CEO Andy Golding has “put together a business with lower costs, higher profit margins and stronger customer loyalty than virtually all its peers”. Brokers are expecting full-year profits to jump by 60% to £425m. The group’s strong balance sheet and the promise of share buybacks and a special dividend next year make it a buy. 501p
Three to sell
(The Motley Fool) High Tide, a cannabis retailer, is not a profitable business “and likely won’t be for a long time”. It has reported sales of C$152m (£90m) and losses of C$32m (£20m) for the year to the end of October. Its gross margins of 36% “aren’t bad, but they’re likely to get... worse” following the recent launch of its “discount club loyalty plan”. This will attract more customers but hamper longer-term profitability. Avoid. C$9.82
(The Daily Telegraph) CureVac is a German mRNA specialist, like Covid-19 vaccine developer BioNTech. The latter’s shares have jumped since last year when it announced the partnership with Pfizer had resulted in an effective jab. Unfortunately the resemblance between the two mRNA firms “does not extend to share-price performance”. The stock has lost two thirds of its value since February. There was hope its vaccines would be effective against new coronavirus variants, but development has lagged more than expected and the company has abandoned its first-generation vaccine. Investors should sell now before the share price becomes even more volatile. $35.87
(The Sunday Times) Games Workshop sells table-top figurines for fantasy settings such as Warhammer. It is “embroiled in a skirmish with... customers”. Determined to protect its intellectual property, it is clamping down on fans ripping off its miniatures with 3D printers. That is not unreasonable, but “rather more brutal” is the decision to punish fans creating animations based on their characters. Customers are irritated and the stock has slid. Sell. £96.60
...and the rest
Ford Motor Company has refreshed its product range, pivoting towards electric vehicles. The strategy seems to be paying off: Ford was the top-selling US carmaker in the last two consecutive months. Buy now for long-term growth ($20.50). Electrical goods retailer Currys’ shares went up after it revealed a £75m share buyback programme and robust performance for the six months to 1 October. It has also managed to “mitigate supply chain and staffing issues”. Keep buying (134p).
DCC is “an eccentrically diversified conglomerate”, supplying oil and petrol in the UK, beauty products in Germany, and “bits of cable” in France. Operating profits rose by an annual 15.5% in the six months to 9 November. Hold (6,254p). Electrocomponents, which distributes electrical and industrial parts, has benefited from the growth in online spending. It reported a 91% year-on-year increase in pre-tax profit to £142m for the six months to September and its customer base has grown by 24% in the last two years, but it’s not immune to cost pressures. Hold for now (1,178p).
The Motley Fool
Latin American travel portal despegar.com was having a hard time even before the virus. Revenue slipped in 2019. Third-quarter sales in 2021 are expected to total 43% less than in the same quarter two years ago. Avoid ($11.49).
The Daily Telegraph
Gerresheimer, which makes phials for vaccines, has seen its shares drop by 18% in a year. But demand for vaccines and their containers isn’t going anywhere. Hold (€79.40).