MoneyWeek’s comprehensive guide to the best of this week’s share tips from the UK’s financial press.
Three to buy
The Sunday Times
Amazon and Netflix have been bypassing the big screen by streaming original content straight to laptops, yet Europe’s second-biggest cinema chain is “shaking off this latest challenge”. Its new outlets across the continent provide a “natural hedge” against a slowing UK economy. “Experts have been predicting the demise of the cinema since the arrival of the TV set”, but these shares still have room to grow. 717p
The Mail on Sunday
This Aim-listed firm has amassed “the world’s largest library of virtual-reality music”, enabling fans to experience the excitement of concerts, festivals and studio sessions as though they were actually there. Virtual reality has so far largely been restricted to video gamers, but its appeal is spreading. “An exciting punt for the adventurous investor.” 6,125p
Marks & Spencer
M&S is something of an “ugly duckling”, with the share price down 24% in the last three years. Online competitors such as Asos and Boohoo have been chipping away at its market share. Nevertheless, chief executive Steve Rowe has launched a five-year turnaround plan, and there is a near-6% dividend yield to enjoy in the meantime. “Marks & Spencer has a solid brand” that is sure to last. 329.5p
Three to sell
The departure of AA’s chief, Bob Mackenzie, has overshadowed the accompanying “nasty warning” about AA’s performance. The “fourth emergency service” reported “erratic load patterns” in June and July: it ran out of engineers and had to call in external help, raising costs and hitting margins. Growth in the insurance and driving-services side has been slow. Avoid. 211.5p
Shares in the retail logistics specialist have surged since the initial public offering in 2014. The business is benefiting from the continued growth of online shopping. But broker Cantor Fitzgerald reckons the shares now trade at a 100% premium to the broader parcels and logistics sector. With no more catalysts for further upside in view, it’s time to book some profits. 420p
Mitchells & Butlers
Shares in the pub group jumped 18% after a third-quarter update showed 2.6% like-for-like sales growth for the ten weeks to 22 July, helped by the sunny weather. But costs remain “challenging” and likely to weigh on margins for the time being, and UK consumer confidence will remain fragile for as long as wage growth falls short of inflation. We are staying bearish on the shares for now. 238p
And the rest
The Daily Telegraph (Questor)
Income-focused trust Schroder Income Growth Fund has outperformed some of its better known and pricier peers over the last five years (300p).
Copper producer Central Asia Metals is the “closest thing to a bond proxy” you will find in the volatile world of mining equities (218p). Relx is less glamorous than some of its media peers – it produces scientific and legal journals – but it’s a quality, long-term buy (1,660p). Leeds-focused property investor Town Centre Securities is ideally placed to benefit from strong activity in the UK’s regions (292p).
British Land is still going cheap (612p). Royal Dutch Shell has long attracted income seekers and, with oil prices recovering “somewhat”, concerns about a dividend cut should be put to bed (2,152p).
Encouraging first-half results and an attractive yield are reasons to keep buying into BP (462p). Corporate panic over new data-protection rules should provide ample work for IT project skills specialist FDM (940p). Innovative flooring specialist Victoria has global growth potential and could become an excellent source of dividends (545p).
Packaging business Mondi boasts a strong market position with high margins and “there is a chance of special dividends” (1,948p).
A German view
Switzerland’s Georg Fischer has just reported a 12% jump in net income for the first half of 2017. The group’s three divisions are all benefiting from structural increases in demand. The company’s piping division, which produces metal and plastic pipes for oil, gas, chemicals or water, is profiting from global infrastructure spending and digitisation, says WirtschaftsWoche. Big servers and data processors need cooling, and Georg Fisher’s pipes come in handy. Meanwhile, its light metal and iron casting components are used by electric and hybrid carmakers. The group’s high-precision machine tools are increasingly sought after in the expanding aerospace and microelectronics sectors. The stock, which has doubled since 2015, therefore remains a solid bet.
Tim Warrillow, CEO of drinks maker Fever-Tree, has sold 1.5 million of his shares in the business at 1,925p each, netting £29m. Non-executive chairman Bill Ronald also offloaded 50,000 of his own shares. Fever-Tree shares have hit 66 times forward earnings. The group said the sales had been made to increase the stock’s liquidity and satisfy investors’ demand after recent results showed profits doubling. “Hopefully, these sales have quenched investors’ thirst,” says
Julia Faurschou in Investors Chronicle, as the “founders won’t be able to sell any more shares for 12 months”.