Share tips of the week

MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK’s financial pages.

Three to buy

BBA Aviation

The Sunday Times

The upbeat economic outlook for the US is good news for this FTSE 250 repairer of business jets and turboprop planes – America’s executives and small-business owners switch to company planes when times are good. Debt has been dropping and BBA is “throwing off more cash than it knows what to do with”. It could opt to splurge on a big takeover, but analysts think a special dividend could be on the way, and growth is not stalling yet. Buy. 344.25p

ISS

The Daily Telegraph

This Danish business-to-business provider of cleaning, catering and security services is not a household name. But you have probably encountered some of its 500,000 staff, whether in the NHS, at the reception desks of City banks or cleaning on the London Underground. High recurring revenues and the “secular” (long-term) trend towards the outsourcing of such functions by companies should mean ongoing organic growth: a long-term buy. Dkr241

Sainsbury’s

The Sunday Telegraph

The FTSE 100 may be flirting with record highs, but recent gains have been driven by businesses with overseas revenues, while “Brexit hysteria” leaves domestically focused firms looking oversold. Business fundamentals at Sainsbury’s have been improving for some time and the supermarket chain is well placed to benefit if the stock-market decides to re-examine British-focused companies. Its shares are also cheaper than those of its peers. 241p


Three to sell

Debenhams

Investors Chronicle

Investors Chronicle stuck with department-store chain Debenhams last year as the shares tumbled, as its near-7% dividend yield made it a good income pick. Yet with news of a poor Christmas trading period and a 35% profit downgrade for 2018, it is worth asking: how long can management continue to support those generous pay-outs? It’s true that on just eight times forward earnings the shares carry a “bargain-basement rating”, but it’s with good reason. Sell. 30p

IAG

The Times

This airline amalgam – which includes British Airways and Spanish airline Iberia – is currently trading at close to record share-price highs. The group hopes to disrupt the budget transatlantic market with a new brand – Level – while it also plans to reinvent Irish airline Aer Lingus as a budget carrier. However, the experience of history tells us “aviation revolution is best done by entrepreneurial disruptors, not the bureaucracy of BA”. With the group facing a choice between “inevitable decline” and “radical overhaul”, it is a good time to exit at a profit. 664.75p

Plus 500

The Times

The spread-betting firm won nearly 250,000 new customers last year, helped by strong volumes in its cryptocurrency trading services, driving up its shares. Yet, as with cryptocurrencies, it has not always been a smooth ride, with a notable slide last month after European regulators warned on derivatives trading. Nor is it clear how Plus500 is managing the risks associated with virtual currencies. This looks like it could be a good time to exit. 1,107p


And the rest

Investors Chronicle

Next’s performance beat management hopes in the run-up to Christmas and the fashion chain still looks appealing at the current price (4,841p). Apple has been hit by a lawsuit from disgruntled users of older iPhones, but the tech giant is unlikely to be troubled – buy ($171). Adjustments due to US tax changes will hit Shell’s fourth-quarter results, but are a boon in the long run (2,492.5p).

It’s not too late to buy Serica Energy after a purchase of North Sea fields from BP in November transformed its prospects (76p). Shares in concrete-levelling specialist Somero look ripe for re-rating and more special dividends could be on the way (279p). Regulatory challenges have hit water giant Pennon recently, but past Ofwat reviews have shown the group to be the “best-in-class” (768p). The high street has its problems, but retail real-estate investor NewRiver Reit stands to gain from the rise of convenience stores (319.5p).

The Mail on Sunday

The Mail’s Midas column picks three stocks for the year ahead, including high-end filter maker Porvair, which has doubled turnover in the last five years (455p). Biotech investor Syncona has already tasted success and looks set for “further substantial growth” (210.5p). Fast-growing legal and professional services firm Gordon Dadds should do well even if the economy falters (142.5p).

The Times

Software business Wandisco has announced a record contract win, further proof that it remains a leader in its field (627.75p). With the dollar and pound expected to weaken this year, miners Centamin and Fresnillo provide the hedging attractions of gold, plus dividends on top (158.5p; 1,423.5p). Things are looking up for oil explorers. Chariot and Kosmos could offer big rewards for those willing to take a risk (19.25p; 515p).