Share tips of the week – 24 December

Five to buy

Revolution Bars 

The Sunday Times 

Despite rising coronavirus cases, “the return to normality could be quicker than feared”, making Revolution Bars worth “a small punt”. The potential for further restrictions is “dismal, but not terminal”. The group has raised £34m from shareholders throughout the pandemic, leaving it with net cash of £4.6m, something “few of its rivals can say”. There are 18% fewer nightclubs and 7% fewer bars competing for its customers than before the pandemic, and many of the remaining ones might not cope with upcoming restrictions. That means Revolution is likely to be left in a stronger position when regular trading returns. It’s a risky buy. 18p

K3 Capital 

The Mail on Sunday 

Talk of mergers and acquisitions conjures up the image of big American banks, but K3 Capital is a Bolton-based, “down-to-earth” company that has bought and sold more businesses than any other firm in the UK. It completed 605 deals between 2017 and 2020, placing it 50% ahead of its nearest rival. In 2021 it sold 167 businesses in the first half alone, focusing on privately-owned British businesses in a wide array of sectors with sales ranging from “a few thousand pounds to £100m”. The company “keeps tabs” on around half of the four million small, privately-owned businesses in the UK, providing ample opportunity in the future. 337p

Hollywood Bowl 

Investors’ Chronicle 

Lockdown was “a down period” for bowling chain Hollywood Bowl. But after reopening, “customers awash with saved cash and no ability to spend it abroad returned to the alleys”. The company saw record sales of £20.1m in August, up 50% from the same month in 2019. There was a 28.6% increase in revenue compared with 2019 for the months the sites were open. People “were bowling more frequently and were eating and drinking more” as they did so. The company was productive in lockdown, opening two new centres, and it plans to open at least ten more by 2025. It has retained most of its coronavirus measures, which have protected it from cancellations. This might change as Omicron cases rise, but the firm’s resilience  so far bodes well. 227p 

Tristel 

Shares 

Infection-prevention and contamination-control specialist Tristel’s total potential market has increased significantly as demand for infection prevention has climbed. Its products are used by hospitals and laboratories to disinfect non-invasive medical devices, a lot of which were out of use after patient examinations were put on hold throughout the pandemic. The resumption of these services should fuel growth. Tristel has “barely scratched the surface of the global market opportunity for its patented products”. 492p 

Bellway

The Daily Telegraph Housebuilder Bellway’s prospects remain “attractive”. There have been only 167,000 new housing starts in England in the last year, so the long-term imbalance of supply and demand is unlikely to change. However, mortgage payments account for less than 30% of average earnings, meaning house prices “continue to be relatively affordable”. The scheduled end of the Help to Buy scheme in 2023 could also persuade first-time buyers to bring forward their plans, all of which would bode well. The group has a solid financial position and plans to raise its annual output of new houses by 20% in two years. 3,320p

...and the rest

The Daily Telegraph 

Online estate agent Purplebricks’ half-year results, due last week, were delayed owing to a potentially expensive mishap: its lettings arm apparently failed to notify tenants that their deposit had been put into a national protection scheme. The upshot is that they will now be able to claim up to three times the value of their initial deposit. This will cost the group between £2m and £9m. Its first-half trading update also included a profit warning. Avoid (24p). 

The Mail on Sunday 

Potash miner Emmerson’s mine in Morocco will be “less costly... complex and... ambitious” than rival Sirius Minerals’s, making it the safer choice. Work is under way and operations should be up and running by 2024, “swiftly ramping up to annual production” of more than 700,000 tonnes of potassium-rich salt, for which there is a huge need in Morocco. Prices have risen sharply amid high global demand. Adventurous investors should buy before the stock takes off (6p). 

Investors’ Chronicle 

Retail group Frasers produced “robust revenue and profit growth” for the half year to October. Its top line could struggle should stricter restrictions return, but its online presence is growing, while its prospects and brands are strong. Buy (736p). 

Shares 

Somero Enterprises makes concrete flooring equipment, necessary for the “acres of automation-laden warehouse space” needed as companies “embrace digital commerce”. The stock is up by 65% this year and analysts think it could climb by a further 50% over the next 12 months. The firm’s forecasts for sales and profits have also risen. Buy (522p).