Share tips of the week – 10 December

Six to buy

DS Smith

(The Sunday Telegraph) “Just over a quarter of retail sales in Britain now take place online,” but consumers are increasingly demanding an end to unnecessary plastic wrapping with their deliveries. This FTSE 100 packaging giant provides paper-based packaging that can also be recycled. The shares have slipped by 17% over the last three months, perhaps because higher inflation is driving up input costs. However, the latest trading update shows that it is managing to pass those costs on to users, protecting margins. On a price/earnings (p/e) ratio of 15.5 the shares are reasonably priced for the growth prospects and also yield 3.2%. 373p

McColl’s Retail Group

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(Interactive Investor) This convenience-store and newsagent operator has announced plans to convert 450 of its 1,200 sites to the “Morrisons Daily” format by the end of next year. McColl’s has a wholesale supply deal with the supermarket. The Morrisons format generates more revenue thanks to the grocery offering. McColl’s is an “over-indebted, low-margin operator”, but there is scope for a profitable turnaround for risk-tolerant investors prepared to take a “penny-stock punt”. 12p

Redde Northgate

(The Times) The shortage of new cars is not bad news for everyone. This FTSE-250 commercial-vehicle rental provider has been enjoying strong demand in the past few months. It can also command higher prices for decommissioned vehicles that it sells into the used market. That tailwind should endure: on current projections it may be another two years before the vehicle market moves back into balance. Meanwhile, cost savings from last year’s merger of Redde and Northgate should keep margins healthy. On just 11 times forward earnings the shares are a buy. 443p

Renalytix

(Investors’ Chronicle) Chronic kidney disease is a growing problem, driven by high rates of diabetes in the developed world. To avoid expensive dialysis and other complications it is vital to catch cases early. That is where KidneyIntelX, Renalytix’s diagnostic product, comes in. It combines blood tests with data on patients’ medical histories to assess the risk. The business is still loss-making, but there are no other products of this kind available. As the algorithm is fed more data it will improve and Renalytix’s “first-mover advantage” will be enhanced. 701p

Speedy Hire

(Shares) This equipment-rental firm has bounced back from the pandemic, with earnings before interest, taxes,depreciation and amortisation (ebitda) for the six months to September almost back to 2019 levels. Speedy Hire is using artificial intelligence and its “huge database” to increase the amount of time its assets are hired out. It is also expanding its retail arm in partnership with DIY chain B&Q. Trials have been so successful that in-store concessions are being rolled out more widely; retail commands higher margins than the trade business. On just 15 times this year’s earnings the shares offer good value. 63p

Virgin Wines

(The Mail on Sunday) Shares in this online wine seller have had a rough ride over the past few months owing to concern about supply chains. But the worry is overdone. Well-stocked warehouses and “watertight contracts with courier services” mean that whatever goes wrong on the virus front, this will not be a dry Christmas. Consumers drink “about 200 million bottles of wine” over the festive season. With its exclusive wines, curated cases and bacchanalian gifts, this firm is well placed to take a bigger slice of the market. 180p

...and the rest

The Daily Telegraph

Shares in vaccine makers have soared as Omicron has emerged, but drugs giant AstraZeneca has been left out in the cold. The stock’s pullback gives investors a chance to buy into a business with plenty of strings to its bow beyond Covid-19 jabs (8,276p).

The Mail on Sunday

Shares in Irn-Bru maker AG Barr have fallen by 40% since a profit warning in 2019, but things are looking up: full-year profits are set to eclipse expectations. Brokers see significant upside, so new investors may wish to “grab some stock” at this price (520p).

Shares

Food and drink wholesaler Kitwave Group is shrugging off the HGV-driver shortage as it has its own in-house fleet of delivery vehicles. A strong update last month confirms that it is “emerging from the pandemic as a stronger business”. Keep buying (146p).

Investors’ Chronicle

Health and safety compliance specialist Marlowe has undertaken a “dizzying run of acquisitions”, buying 64 firms over the past couple of years. It still has room to grow in what remains a fragmented market, but investors should keep an eye on “increasing balance-sheet leverage”. Buy (927p).

The Times

Personalised gift-card business Moonpig is a “retail giant”, but it “may have grown a little too porky”. On 33.9 times earnings the shares are richly valued, but reopening is bringing more competition from rivals. Avoid (325p). GB Group is on the front line of the battle against cyberfraud. A £550m US acquisition shows consolidation in the industry has further to run. Buy (780p).