MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK press.
Three to buy
Hollywood Bowl
The Mail on Sunday
Many of Britain’s bowling alleys are old-fashioned, but Hollywood Bowl’s “bright, modern” sites in high-footfall shopping malls set Britain’s top ten-pin bowling operator apart from the competition. The firm drives a hard bargain with prospective landlords to keep rent costs down and is expanding steadily. 188.5p
National Express
The Sunday Times
Bus and rail companies such as Go-Ahead and Stagecoach have proved terrible investments recently, but “not all beasts are created equal”. National Express got out of UK rail ahead of competition, and derives about 80% of its revenue from overseas. It is the second-biggest school bus operator in North America. It also still controls 60% of the UK coach market. 364.75p
Shire
Investors Chronicle
Shire is facing up to a $20.4bn debt pile while competition is intensifying. Yet with the shares down almost 24% since March, they now look too cheap: net debt is coming down, there are signs of improving cashflow and there is an experienced management team. Promising new drugs in the firm’s pipeline could spark a re-rating. 3,712p
Three to sell
Aggreko
Shares
Shares tipped this temporary power provider as a recovery buy in January, but it has had a “torrid year”. A recent trading update caused the shares to fall 10% on bad news about contracts and orders in Japan, Zimbabwe and Argentina. The firm also faces challenges, including oil-price volatility and emerging-market uncertainty. Shares has cut its losses. 860p
Centrica
Shares
A profit warning means that the British Gas owner’s dividend is at risk. Centrica has cut its earnings forecast after losing 823,000 UK customers and coming under market pressure in North America. It is now caught between stiffer competition and government regulation. The prospective yield of 8.6% is a sign the market doesn’t believe its dividend forecasts. 142.75p
Halma
The Daily Telegraph
The safety systems group has delivered a strong set of interim results – a relief after a string of setbacks. The shares have much that makes for an ideal investment: health and safety regulations ensure regular purchases and high margins, and the group has a record of dividend growth. Yet with the shares now up to 30 times forward earnings, there is no margin for error. 1,297p
And the rest
The Daily Telegraph (Questor)
Rising profits and a stronger balance sheet should see business software specialist IMImobile re-rate (201.5p). ITV’s share price has been trading at its lowest level in more than four years – time to “tune in” and buy (159.25p).
Investors Chronicle
Patient investors in global insurance services group Charles Taylor should eventually see the shares re-rate (278p). A weakening housing market has weighed on housebuilders, but MJ Gleeson is unlikely to have much trouble selling its affordable homes (710p).
The Mail on Sunday
Gold producer Hummingbird Resources almost collapsed a few years ago, but is now staging a comeback (38.75p).
Shares
Music and audio products specialist Focusrite has “a formidable track record” (324p). Transport analytics firm Tracsis has renewed momentum after a year to forget (575p). Buy into Young’s, Fuller’s and City Pub to get exposure to the premium end of the pubs industry (1,344p; 951p; 181p). Shares in bathroom firm Norcros look cheap after a £60m acquisition in Ireland (180p).
The Times
General Motors has built a base in the electric car market, and pays a dividend ($44). Insurer Aviva is growing following a successful restructuring (511p). Cineworld’s $3.6bn plan to buy Regal, America’s second biggest cinema chain, will “take things to a new level” (557p). Ocado’s deal with France’s Groupe Casino has defied its critics (309.5p).
IPO watch
Siemens, Europe’s largest industrial conglomerate, has announced plans to list its €40bn medical division, Healthineers, in Frankfurt. The spin-off will be the largest initial public offering in Germany since 1996, when Deutsche Telekom raised $13bn. Siemens is expected to sell a minority stake of up to 25% for roughly €10bn, a figure based on current market valuations.
The decision to list in Frankfurt – probably in the first half of next year – is a coup for Deutsche Börse, which has been overshadowed in the race for large listings by New York, London and Hong Kong, says the Financial Times. In the third quarter of 2017, Healthineers was the largest of Siemens’ nine divisions by revenue, with sales of €3.7bn. It was also the most profitable.
An American view
Salesforce.com is outgrowing its name, says Jack Hough in Barron’s. In the late 1990s, the group pioneered the idea of selling business software over the internet. This quickly caught on among smaller companies in particular, as there is no hardware required and nothing to install, while the software is automatically updated. Today, the group remains the leader in customer relationship management (CRM), the business of tracking sales, service and marketing interactions.
The sector remains lucrative, with $14.6bn of corporate spending still on offer, according to Garnter, a consultancy. New products such as App Cloud, a platform to help customers build their own apps, should help revenue rise by a fifth next year. The shares could climb by a similar amount, reckons Hough.