Share tips of the week – 17 December

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

Ashtead 

Investors’ Chronicle 

Industrial-equipment rental company Ashtead has raised its full-year guidance following “an excellent start to the year”. In the six months to 31 October revenue was up by 18% year-on-year. Both its US and UK businesses are reporting strong growth. The company has trimmed operating costs and cut back on discretionary spending, which has strengthened its balance sheet and helped finance ten acquisitions to expand its footprint. 5,954p 

Tharisa

Shares

Coronavirus-related concerns in South Africa have weighed on platinum and chrome miner Tharisa’s share price, but it “should regain momentum as evidence piles up of its improved cash flow in 2022”. For the 12 months to 30 September the company reported record pre-tax profits of $185.3m, up by 145% year-on-year. Free cash flow grew to over $100m, and the dividend rose by 157%. Its balance sheet was strong at the end of the year, with net cash of $46.6m. Work in the group’s mines is “socially distanced by nature of the operations”, which means that potential virus-induced restrictions should have scant impact. 117p 

Schroder European Real Estate Investment Trust

The Mail on Sunday

This trust offers investors exposure to “a wide range of commercial properties across Europe… targeting annual dividend yields of 5.5%”. Brexit and the pandemic have weighed heavily on the share price and the discount to net asset value (NAV) is 17.5%. Nevertheless, the company has continued to deliver income to shareholders.Both dividends and the stock should increase as the world recovers from Covid-19. 104p

Three to sell

BB Biotech 

The Daily Telegraph

Swiss biotech trust BB Biotech is trading at a “hefty premium” of 31% to its net asset value (NAV). “It’s hard to see why… when its two London-listed rivals trade in line with their NAV.” The company has benefited from the success of coronavirus vaccines; Moderna, in which it bought a stake in 2018, remains its largest asset. This has bolstered recent returns, but the longer-term performance of the fund lags behind London-listed rivals Biotech Growth and International Biotechnology, as well as the Nasdaq Biotechnology index. The firm looks overvalued, and there is no clear sign it will outperform its peers. Avoid. SFr78 (£64)

Sweetgreen 

The Motley Fool 

Sweetgreen is a US fast-casual restaurant chain that serves salads. The stock’s “initial pop” after it floated last month seemed “overdone”. It’s a strong brand “and folks aren’t flinching at paying an average of $15 for one of its fresh leafy creations”. But its valuation of $3.4bn looks lofty given that the chain has yet to turn a profit. Competition is intense. The stock “doesn’t deserve to be trading at a double-digit revenue multiple”. Avoid. $29.52 

Babcock 

Investors’ Chronicle 

Babcock is an aerospace, defence and security company that struggled in the pandemic. It sold off three businesses worth £400m over the past few months, which will help reduce net debt. Operating profit for the six months to September 2021 was up by 36% and CEO David Lockwood plans to streamline the company’s structure. “But the task of fixing Babcock is far from over… until a clearer picture emerges, it’s one to avoid.” 306p 

...and the rest

Investors’ Chronicle 

Impax Asset Management’s decision to concentrate on ethical investing has “paid off handsomely”. The fund manager’s “trophy funds” have enjoyed a record year; assets under management are up by 84% to £37.2bn. Hold (1,372p). Investment platform AJ Bell has launched two apps to attract more Millennials “to a simplified investment proposition”. These upgrades won’t be cheap, but show the company is ready to fight for its market share. Hold (387p)

The Mail on Sunday

Sirius Real Estate owns and runs business parks in Germany, and is now expanding into the UK. Further acquisitions are expected, which should translate into sustained income and dividend growth. Keep buying (140p)

Shares

Odyssean Investment Trust has a knack for selecting takeover targets, and the latest bid for pharmaceuticals group Clinigen, one of its holdings, has provided a boost for its share price. Results for the six months to September 2021 revealed an impressive 13.5% increase in net asset value (NAV) per share. Buy (157p)

The Daily Telegraph

Nvidia is a computer-chip designer. Its technology powers social-network features on TikTok and Facebook as well as Microsoft Word’s grammar checks. It looks poised to benefit from the “three major trends of the next decade”: artificial intelligence, augmented reality and 5G mobile networks. Buy ($282). Engineering firm Spirax-Sarco has raised its dividend for more than 20 consecutive years. It dominates the market for products regulating steam and electric-thermal energy, an area competitors will struggle to gain a foothold in. Buy (15,745p).

Recommended

Unilever slides and GSK bounces after GSK knocks back £50bn bid
UK stockmarkets

Unilever slides and GSK bounces after GSK knocks back £50bn bid

Unilever shares fell to their lowest level in around five years, after its £50bn takeover bid for GSK’s consumer health unit was rejected. 
17 Jan 2022
Cladding crisis: what new proposals for mean for housebuilders and leaseholders
Property

Cladding crisis: what new proposals for mean for housebuilders and leaseholders

The government has said that no leaseholder living in a block of flats more than 11 metres tall should “ever face any costs” for fixing dangerous clad…
17 Jan 2022
Seize these investment trust bargains in 2022
Investment trusts

Seize these investment trust bargains in 2022

Attractive investment trusts are trading at a discount, and those waiting for the perfect time to buy will miss out. Max King picks a selection of the…
17 Jan 2022
Britain's high street comes back from the dead
Retail stocks

Britain's high street comes back from the dead

Creative destruction has wrought its magic on the high street and there are new signs of life in retail, says Matthew Lynn
16 Jan 2022

Most Popular

US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022