MoneyWeek’s comprehensive guide to this week’s share tips.
Three to buy
RELX
Shares
The professional information and events company is one of the 20 biggest firms listed in London by value. It is tapping into the big-data trend to provide business analytics globally, and its events division is a world leader in its industry. The shares don’t come cheap, but should prove resilient even in the event of a downturn. 1,754p
Angling Direct
The Mail on Sunday
Angling is a top five pastime in the UK, with 900,000 registered anglers and “many more unofficial dabblers”. Angling tackle is a lucrative market with the average angler spending about £750 a year. The sector is dominated by “small, one-man stores”, but the UK’s largest specialist fishing-tackle retailer hopes to benefit from market consolidation. It also has a flourishing online operation. 78p
Workspace Group
The Sunday Telegraph
In major cities, shared office space for start-ups and freelancers is now “as ubiquitous as branches of Pret A Manger”. Demand for London office space has cooled since the Brexit poll, yet half-year results from this FTSE 250 real-estate investment trust are encouraging. With the shares still trading at a discount, this is a good play for those who still have faith in “London’s entrepreneurial streak and global pull”. 945p
Three to sell
Dignity
Investors Chronicle
Investors in funeral provider Dignity used to have little more to worry about than fluctuations in the UK’s death rate. No more. Increasing competition from rivals is taking market share – equivalent to 4,000 funerals lost last year. Dignity may be forced to shrink its margins in response. Disappointing results and high debt levels mean that investors are “best off out of it”. 1,843p
Go-Ahead Group
The Daily Telegraph
Ructions in Tory ranks have re-ignited fears that Jeremy Corbyn could soon be in Downing Street. Labour’s nationalisation plans mean that energy, support services and rail operators such as Go-Ahead will all find themselves in the firing line, while Go-Ahead’s bus division could be next in Labour’s sights. The heightened political risk means you should cut your losses and sell. 1,622p
Just Eat
The Sunday Times
This takeaway app has been promoted to the FTSE 100, with the market valuing the business at more than £5.5bn. Just Eat acts as a middleman between restaurants and consumers, creaming off 13% commission. Yet at 52 times this year’s earnings, the shares look “fit to burst”, as rivals such as Uber Eats and Deliveroo eye the group’s fat profit margins. 819p
And the rest
The Daily Telegraph (Questor)
Engineer Renew Holdings is set to profit after “a wave of new spending promised by the chancellor” (426p). Kitchen towels maker Accrol lacks pricing power and the share price has plunged (46p).
Investors Chronicle
Mainstream lenders are pulling out of the buy-to-let mortgage sector, leaving room for OneSavings Bank (375.75p). Energy supplier Yu Group is growing rapidly and ready to take on the “big six” (795p).
The Mail on Sunday
Shares in home-repairs business HomeServe have risen 35% since the Mail tipped them last year – cautious investors may wish to cash in some of the gains, although the stock should “continue to gain ground” (804p).
Shares
Analysts may be underestimating the potential of cybersecurity play NCC (226p). Alpha Financial Markets Consulting is making hay as asset managers outsource more work (166.5p). Acquisitive Harwood Wealth Management has said that performance should beat market expectations (180p). Sports nutrition specialist Science in Sport looks set to grow globally (75p).
The Times
The world’s biggest contract caterer Compass Group justifies its premium rating (1,538p). The march to phase out the internal combustion engine may leave catalytic converter specialist Johnson Matthey “flat-footed” (3,158p). Buy WM Morrison shares while they are cheap –
a dividend or share buyback could be on the way (215.75p).
IPO watch
British motor insurer Sabre, the firm behind Go Girl and Insure2Drive, has announced plans to go public at a valuation of £600m after talks to sell the group privately came to nothing. The Dorking-based firm is aiming to float by the end of the year, and wants to raise around £206m at a price range of 220p to 240p per share. The shares are currently owned by private-equity group BC Partners, which holds two-thirds, with the rest owned by current management and founders Keith Morris and Angus Ball. Sabre, which was founded in 1982, targets unpopular parts of the car insurance market – customers include new drivers and sports-car owners. Last year, the firm generated premiums of £197m and net profits of £52m, up 54% on the previous year.
A German view
Selling crockery and bathrooms isn’t a particularly exciting line of work, but it is proving profitable for Germany’s Villeroy & Boch, which started out as a pottery business in the 1750s. Its core bathroom division is benefiting from the building boom in the developed world and steadily expanding demand in emerging markets. V&B’s line of accessible bathrooms suits the world’s ageing population. Meanwhile, a good Christmas is crucial for the tableware division, as WirtschaftsWoche points out, so it bodes well that consumer confidence has reached a ten-year high and retail sales are expected to climb by 2%-3% this holiday season. China and the Middle East should comprise a fifth of total sales, worth an estimated €840m, this year, while the bottom line is expected to rise to a record €33m. The stock yields almost 3%.