Share tips of the week – 7 October

Five to buy

AstraZeneca

The Times

Pharmaceuticals giant AstraZeneca has spent the last ten years slimming down its “previously disparate drug portfolio” and increasing investment in research and development, which now comprises 20% of revenue each year. “The result has been... sales growth outstripping listed peers.”

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The company also boasts 13 “blockbuster” drugs generating at least $1bn in sales a year. While the patent for two of them will expire in 2025, it boasts a “meaty pipeline” and several ongoing clinical trials. The shares have doubled since 2017 and “they could perform just as well to 2027”. 9,763p

Finsbury Foods

The Mail on Sunday

“If you’ve had Thorntons caramel shortbread, a Mary Berry-branded chocolate sponge or a boozy Gordon’s gin cake,” you have tasted Finsbury Foods’ products. The company produces many of the country’s well-known cake brands, and in 2018 expanded into gluten-free goods with the acquisition of Ultrapharm.

The company has warned of rising costs, but it reported record full-year results this week thanks to a “strong post-Covid recovery in cake buying”, both in the UK and overseas. The uncertain outlook explains the shares’ “lowly” rating; they are down 28% in five years. But patient investors “could benefit in the long term. Buy on current weakness.” 81p

Kape Technologies

The Sunday Times

High-growth tech companies in the UK have been “consumed by foreign suitors in recent months”. Kape could be a target too. Despite only being five years old the company has seven million paying subscribers to its digital-security software products, which provide secure internet connections and protection against viruses, trackers and malware.

The company has benefited from the increase in cybersecurity threats. First-half results showed that revenues rose from $95m for the same period last year to over $300m this year, and it has an impressive customer retention rate of 82%. 250p

Ten Entertainment

Investors’ Chronicle

Is there is a downturn-proof sector? “One somewhat left-field option… is ten-pin bowling.” In its results for the six months to 26 June, the bowling-alley operator Ten Entertainment highlighted a “new sustainable baseline” for demand that sits 30% above pre-pandemic levels. The firm says like-for-like revenue was 46% up on 2019 levels in the first half of 2022.

Ten stands a good chance against inflation as “compared with other leisure activities” the price of bowling is reasonable. “[Earnings] upgrades, strong trading and solid projections” make the stock a buy. 214p

JPMorgan Global Growth & Income

Shares

The Scottish Investment Trust was subsumed into the JPMogan Global Growth & Income fund in early September. Existing investors in both funds are due to benefit, while this is a “great time to buy shares in the combined entity”. Volatile markets have “created opportunities to invest in great businesses at more attractive prices”, which the combined trusts excel at.

Management relies on a skilled group of analysts tracking 2,500 stocks in 19 different sectors. This has resulted in a portfolio free of pricey, unprofitable tech businesses. The trust also aims to pay a dividend of 4% of its net asset value (NAV). 42p

...and the rest

Investors’ Chronicle

Digital publisher LBG Media has slipped from an interim profit in 2021 to a statutory

loss in the first half of 2022 despite an increase in its global audience to 215 million. Investment in staff in the second half of 2021 was the key culprit. Costs have continued to rise, casting doubt on further growth.

Sell (80p).

Shares

“Marmite-to-Magnum ice cream maker” Unilever’s brand strength, pricing power and potential in emerging markets make it a stock to hold onto. The company’s valuation is also attractive compared with its peers, and a “long streak of underperformance has begun to reverse”. Buy (4,064p).

The Mail on Sunday

Octopus Renewables Infrastructure Trust offers exposure to the “long-term theme” of renewable energy. While the energy market is currently unstable, the trust’s 8% discount to NAV makes it attractive “for the brave”. Buy (101p).

The Times

Land Securities operates “ultra-prime” offices in central London, demand for which could fall as companies

struggle with inflation and dearer debt. A further decline in property values could also be on the cards. Avoid (530p).

Venture-capital company Molten Ventures invests in early-stage, unprofitable firms across Europe. It is now vying “for the title of the FTSE 250’s worst performer this year”, as these young technology companies become more difficult to value thanks to the uncertain inflation outlook and the jittery pound. Avoid (307p).