MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK’s financial pages.
Three to buy
Good Energy Group
The Mail on Sunday
Good Energy aims to allow homes and businesses to operate using locally produced renewable energy. The Aim-listed business was one of the first to offer a way for micro-generators such as those on houses, farms and businesses to sell their excess power from solar panels and the like on to the grid. The business has more than 100,000 customers and should continue to grow at a decent pace. 239.75p
Gulf Keystone
Shares
The Kurdistan-focused oil producer has had a torrid time of late as it goes through a debt restructuring. It operates in a volatile region and its fortunes are tied to a single asset – the Shaikan oil field. Nevertheless, a $25m open offer was oversubscribed, showing the markets are still hungry for a company that might become a takeover target, and the firm has scope to expand. “One for the brave.” 2p
Pennon Group
The Times
Pennon’s South West Water subsidiary is on track to achieve high returns in the wake of its acquisition last year of Bournemouth Water for £100m. Pennon is more diversified than other water companies, because it also owns waste-management business Viridor, and with a promise to grow the dividend at 4% above the rate of inflation in the coming years it offers decent returns. 897p
Three to sell
Finsbury Food Group
The Times
Finsbury, which makes own-brand bread, buns and cakes for the big supermarkets, has been improving margins and making acquisitions in new business areas. Revenues and profits are sharply up, but firms in this sector often struggle to pass on cost rises to the supermarkets. With the weak pound pushing input prices up, immediate growth prospects now look limited. 135.5p
Hansard Global
The Daily Telegraph
Profits and client numbers for this offshore savings and insurance group have never fully recovered from the 2008 crisis and new global rules about financial transparency have previously forced a restructuring. The firm is also still involved in costly litigation concerning whether its products are suitable for some clients. It is hard to find any catalyst for a quick recovery in the shares. 120p
Millennium & Copthorne
Investors Chronicle
The luxury hotels group has seen revenue per room fall, with a poor showing in London, New York and Singapore. The company is investing to renovate and build new hotels, but such investments will dent profits in coming years. Management is “dogmatic” in its reluctance to realise the value of the company’s land portfolio by strategically selling valuable sites. 436p
And the rest
| Buys | |
| Aviva | The life insurer is diversifying and a forecast p/e of 8.7 is cheap (Investors Chronicle) 431p |
| Centamin | The Egypt-focused gold miner isn’t perfect, but it’s still undervalued (IC) 135p |
| Fox Marble | Sales should pick up when the stone firm gets its own factory up and running (IC) 9.75p |
| Fyffes | The oldest fruit brand in the world makes for a tasty defensive buy (Shares) 129p |
| IQE | A fast-growing photonics business makes the semiconductor firm cheap (Shares) 30.25p |
| Kier Group | New infrastructure spending means the shares still have room to rise (Times) 1,289p |
| Next | The clothing retailer’s top-class management can ride out the storms (Shares) 4,735p |
| Purplebricks | The online estate agent is gaining market share and has great potential (Shares) 134.25p |
| Regional REIT | Shares in this property firm offer a yield “well ahead of the market average” (Times) 106p |
| Saga | A strong brand in the over-50s market makes for bright long-term prospects (Times) 223p |
| Tesco | There are signs of a recovery at the supermarket under CEO Dave Lewis (Shares) 178.75p |
| Verona Pharma | A new respiratory drug could have “blockbuster” potential in the years ahead (IC) 3p |
Directors’ dealings
The chief executive of wireless connectivity group Telit Communications has bought £230,000 of shares in the company. Oozi Cats is the biggest shareholder in Telit, and now owns a stake that amounts to just over 20% of the entire business. Telit delivered disappointing first-half results due to higher costs and delays in receiving regulatory approval for a new product in America, but news of the deal and the announcement of a collaboration with US microchip giant Intel have helped its shares recover.
A German view
Shares in Germany’s semiconductor manufacturer Infineon have climbed by around 70% to a 15-year high over the past 12 months. But there is plenty of scope for further gains, reckons Boerse Online. The company has just reported a 4% year-on-year rise in operating profits to €254m in its latest quarter, while turnover increased by 3% to €1.6bn.
The smartphone chip market has lost some momentum, but the group looks very well placed in key chip growth markets such as solar energy cells and driverless cars. Analysts expect earnings to climb by 12% to €707m in the year to October 2016. The group has a history of shrewd acquisitions, so the current round of consolidation in the chip sector has also fuelled optimism. Infineon is “a clear buy”.