MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK’s financial press.
Three to buy
3i
The Times
Recent economic data and the decision to hold base rates again have bolstered the case for investing in infrastructure funds such as 3i, which offer an income hard to find elsewhere. 3i recently acquired a phone-mast builder and a Belgian airport-facilities provider, and has plenty of other options. It is not cheap, but an excellent track record and a 4% forward dividend yield make it a buy. 195p
ECSC
The Mail on Sunday
The recent cyber-attack on the NHS underlines the threat posed by hackers, and this fast-growing cyber specialist should reap the rewards. ECSC now has 200 customers, including 10% of the firms listed in the FTSE 100 index. The firm only joined Aim in December last year and has already had a strong debut, but there is still plenty of growth to come. 396p
WPP
Shares
This advertising giant has a 14% share of its market worldwide. It has good exposure to emerging markets and has invested heavily in data and technology. Lacklustre full-year results in March have seen the shares slide by 10%, but this represents a buying opportunity. WPP is a “good long-term holding for any portfolio”. 1,684p
Three to sell
Burberry
The Sunday Times
The luxury goods maker has looked a little lost ever since chief executive Angela Ahrendts left in 2014. Chairman John Peace has created a muddled structure in her absence, which looks like a model for corporate dysfunction. Burberry has received a boost from sterling’s weakness, but unless a bounce in luxury- goods spending comes to the rescue, it is best avoided. 1,635p
Novae Group
Investors Chronicle
Shares in this Lloyd’s of London insurer have dipped after it admitted that its premium income would fall below claims paid. Heightened competition in the sector has driven premiums lower, and there is no sign of the pressure letting up. Add in low interest rates that have given Novae a paltry £10.3m return on its £1.47bn of reserve assets last year, and it is time to sell. 619p
Standard Life
The Daily Telegraph
The £11bn merger with Aberdeen Asset Management brings together two firms that have been suffering an exodus of customers. It is always difficult to make a success of such large mergers and a management structure with two co-chief executives will not help. A 5.7% yield is attractive, but does not obscure the other problems with the deal. 379p
And the rest
The Daily Telegraph
Cineworld still offers reliable growth and dividend prospects (730.75p).
Investors Chronicle
Online conveyancing-technology provider ULS Technology has grown its market share (107p). Buy AstraZeneca before the market realises the true strength of its drug pipeline (4,642.5p). Premier Technical Services Group is a growth buy for those with an appetite for risk (113p). Those brave enough to bet on a recovery at retailer Next can bank a 7.7% forward dividend yield (4,314p).
Shares
Snap up Global Ports to profit from growing demand for cruise travel (740p). With a new US defence budget in the works, Ultra Electronics could get a boost (2,157p). Don’t be put off by recent underperformance at exhibitions firm UBM (716.5p). Focusrite provides audio technology to musicians (263p). First Property is buying up UK commercial property that has been affected by Brexit jitters (51p).
The Times
Derwent London is looking cheap for those brave enough to take a punt on the London property market (2,881p). Growth at contract food-service provider Compass Group should pick up; there is a special dividend to enjoy, too (1,601p). Hiscox has been hitting record highs of late, so some profit taking is in order (1,187p). Avoid William Hill until a review of fixed-odds betting terminals clears up some of the uncertainty hanging over the industry (302.25p).
Retail bond watch
Litigation-finance provider Burford Capital has launched a retail bond that matures in 2026 and offers annual interest of 5%, payable twice a year. The bonds have an initial minimum subscription of £2,000, and are available in multiples of £100 thereafter. The offer closes at noon on 26 May, after which investors will be able to trade the bonds on the London Stock Exchange’s order book for retail bonds.
The bonds will be eligible for an individual savings account (Isa) and a self-invested personal pension (Sipp). Litigation funding provides finance for lawsuits, in return for a share of the damages awarded. Burford, which was founded in 2009, employs 80 people at its offices in London, New York and Chicago. In 2016, it committed $378m to litigation-finance investments.
A German view
Pamplona is famous for the running of the bulls, but it is also home to a multinational company. Viscofan is the world’s top manufacturer of artificial casings for sausages. The products are distributed in 100 countries, and it has factories in Uruguay, China, Mexico and Europe. The company enjoys two key tailwinds, as Wirtschaftswoche points out.
The trend towards higher meat consumption in emerging markets, a result of the new middle classes wanting more varied diets, continues unabated. And barriers to entry are high in the meat industry: constructing factories to produce sausage skins is a very capital-intensive undertaking, which deters potential competitors. Net profits grew by 16% year-on-year to €32m in the first quarter and the balance sheet is healthy. The stock also yields 2.6%.