MoneyWeek’s comprehensive guide to this week’s best share tips from the rest of the UK’s financial press.
Three to buy
The Sunday Times
This Oxford-based business distributes more than 500,000 specialist products, such as digital oscilloscopes and transistors, which it keeps ready to ship the next day.
The shares more than doubled last year, while a strong balance sheet gives it scope
for acquisitions. Buy in to take advantage of the shift to the “internet of things”. 536p
New shop openings, rising online sales and healthy growth are all reasons to buy this fishing-tackle retailer. Angling is the UK’s sixth-largest sport by monthly participation, and Fishing Republic is winning market share by offering customers a better range than independent retailers can provide. Recent results suggest that the strategy is “going swimmingly”. 39p
The Mail on Sunday
HICL is the largest infrastructure firm listed on the UK stockmarket. Infrastructure companies focus on “buying assets that will deliver predictable returns over many years”. In a world of low interest rates and rising uncertainty, the 4.4% dividend yield – which is considerably higher than the interest available from savings accounts – offers plenty of attractions. 173.75p
Three to sell
Dairy Crest Group
It has been a “transformational” year for the dairy products maker, whose brands include Cathedral City. It sold its fresh milk operation at the end of 2015 and has completed a new plant in Cornwall to make whey for infant milk powder. But the investment has pushed debt to an “uncomfortable £250m” and on 15 times earnings the shares look fully priced. Avoid. 590p
The Daily Telegraph
A cut in the dividend may be on the cards at the pharmaceuticals giant. Leading fund manager Neil Woodford has sold his entire stake in the firm, describing three of the group’s four divisions as “perennial underperformers” and suggesting a break up is in order, while a “stretched balance sheet” limits its strategic options. Investors should follow Woodford’s lead and sell. 1,167p
Mitchells & Butlers
Shares in the owner of All Bar One and Nicholson’s pubs have fallen after recent results showed food volume sales down 4.8%, with drinks volumes also slipping. They now trade on just seven-times forecast earnings. Some investors may see a bargain, but a “murky outlook” for consumer confidence and inflationary pressures don’t suggest this is a good entry point. Sell. 257p
And the rest
The Daily Telegraph
Sugar-substitute maker PureCircle has issued a profit warning, but may still appeal to contrarian investors – it has huge potential given the global battle against obesity (315p). A 4.2% yield and a price/earnings ratio of less than 12 means ITV should “appeal to income and value seekers alike”, despite an underwhelming trading update (192.5p).
Landscaping specialist Marshalls can weather economic storms (408p). Gambling hardware and software specialist Quixant should profit as casino machines become more sophisticated (392p). Brighter things are to come for social housing and care provider Mears (504p). HSBC’s 5.8% forward yield makes it the “dividend king” (677p).
Training and information specialist Wilmington looks undervalued (252p). Shares in make-up seller Warpaint have risen 80% as investors wake up to its potential (247.5p). Impax Asset Management is seeing healthy inflows into its funds (100.25p). Healthcare firm BTG has a “compelling portfolio” of revenue sources (664.5p).
Food travel specialist SSP should continue to grow (472.5p). National Grid offers a 4.4% yield (1,049.5p). Property group British Land has announced good results (651.5p). Electronics and beauty products distributor DCC should continue making good deals (7,270p). Shopping centre operator NewRiver Reit shows no signs of slowing down (345.5p).
A French view
Low interest rates and improving household sentiment mean that conditions are slowly improving for French housebuilders, after four difficult years, says Investir. That’s good news for Maisons France Confort, the largest player in its sector. While small firms have been hard hit by weak demand, bigger operators have been able to take advantage of the opportunity to strength their position. Maisons France Confort acquired six rivals between 2012 and 2016, which should add €110m to sales this year. Orders are rising (they should be around €610m for 2016, compared with €511.5m in 2015), and profit margins have recovered (expect 3.8% for 2016, compared with a low of 2.4% in 2015). Both should improve further in 2017 and beyond. The stock trades on 16 times forecast earnings for 2018.
Angling Direct, Britain’s biggest fishing-tackle retailer, plans to list on London’s Aim board for smaller firms, says Will Humphries in The Times. The company was founded in 1996 and has grown from a single tackle shop in Norfolk to a group of 15 shops and an online business, which together brought in revenues of £21m last year. It made profits of £1m, up from £600,000 in 2015. The firm is looking to raise £8m to fund further expansion, including opening three new superstores, putting a fishing tutor in every shop, and improving its online offering. Four million people go fishing a year, and the market is estimated to be worth £570m a year. Competitor Fishing Republic (see left) listed in June 2015 and has seen its shares rise by more than 160% since.