MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK’s financial press.
Three to buy
Forterra
Investors Chronicle
Brickmaker Forterra floated on the stock exchange in April. Within three months, the “savage markdown” in the wake of the Brexit vote had wiped two fifths off the company’s market value – but that has created a buying opportunity. With “strong levels of activity” from housebuilders, and further construction stimulus measures expected from the government, Forterra offers “long-term upside” for investors. 166p
GlaxoSmithKline
Shares
The pharmaceuticals firm has produced clear targets for its consumer healthcare division, which is already creating “a mind-blowing amount of value”. Add in high-quality assets and a tailwind from the weak pound, and Glaxo provides a “heady mix”. Just watch out for weaknesses in the respiratory drugs portfolio, where sales are declining. 1,530p
Sports Direct
The Daily Telegraph
Sports Direct’s shares peaked at 914p in April 2014, but are now down to 296.5p. For all the controversy about its employment practices, the sports retailer still has solid fundamentals. Shares are trading on 5.6 times forecast profits for 2016, which makes them look “grossly undervalued”. 296.5p
Three to sell
Hogg Robinson
Investors Chronicle
The business travel group has turned in a creditable half-year performance, despite tough trading conditions. However, when currency effects are stripped out, results show clients’ spending on travel down by 11% at the travel management operation – which accounts for the “lion’s share” of group revenue. The market’s shift towards online booking shows no signs of easing. Sell. 67p
Serco
The Times
Those who were brave enough to buy Serco at the start of this year, “when things looked at their darkest”, have done very well. The outsourcer has largely avoided the problems of peers such as Mitie, Interserve and Capita and is winning new work. The shares bottomed out in February at 80p and are now at 132.5p, which is 44 times next year’s earnings. Avoid. 132.5p
Britvic
The Times
The soft-drinks maker has seen a mixed performance, with its carbonates division seeing a 5.3% rise in UK revenue in the year to 30 September, but disappointing results from its UK still drinks division and the French business. Britvic shouldn’t be too badly affected by a crackdown on sugary drinks, but add in the prices for ingredients and “next year or more looks set to be difficult”. 571.5p
And the rest
The Daily Telegraph
A possible special dividend makes this a good time to buy retailer Card Factory (255p). Royal Mail can withstand pricing pressures in the postal market (455.2p).
Investors Chronicle
Online gambling outfit 32Red is worth a bet – its growth potential is underrated (136p). Shares in Hutchison China MediTech should recover when the firm reports clinical trial results in the coming months (1,915p). Insurer Standard Life could benefit if “Trumpflation” pushes up bond yields (341.5p).
Shares
Cambria Automobiles, the franchised motor dealer, has been oversold (55p). Copper miner Central Asia Metals has announced a new deal in Kazakhstan and is exploring other projects (224p). Tobacco firm Imperial Brands is too cheap for a high-quality stock, on a price/earnings ratio of just 12 (3,496p). Semiconductor technology firm IQE is growing faster than expected in new markets (35.75p). Clothing brand Joules has exciting expansion potential (185p). Analysts are tipping software stock Micro Focus to have a good run (2,103p).
The Times
Private landlord Grainger has made bold moves to boost its rental income (218p). McColl’s Retail, which operates convenience stores, has good growth prospects (175p). Sage is not cheap, but further growth looks guaranteed for the software group (657.5p).
IPO watch: RM Secured
RM Secured Direct Lending is a new investment trust with “a dull name but exciting prospects”, says Joanne Hart in the Mail on Sunday. RM Secured provides funding to small and medium-sized firms with “complex financial needs” in sectors such as satellite communications, student accommodation and boutique hotels. These borrowers struggle to get funding from traditional banks, so RM Secured is able to charge relatively high interest rates. The average rate on the loans it makes is between 8% and 12%, with the loans secured against the borrower’s assets. The trust is managed by Edinburgh-based RM Capital and hopes to raise £100m when it floats this week. Investors who buy in now can expect dividend yields of 4% in 2017 and 6.5% the year after.
A French view
Shares in SIPH, which produces natural rubber on plantations in Côte d’Ivoire, Ghana, Liberia and Nigeria, have gained more than 30% over the past six months, says Les Echos.
Rubber prices were weaker in the third quarter of 2016 (prices averaged €1.18 per kilogram, down 2% on the same period a year ago), but SIPH more than made up in volume what it was losing on price. The number of tonnes sold grew by more than 38%, helping to lift revenues by over 23%. The good news is that rubber prices have been recovering since September. At the same time, SIPH is also managing to curb capital expenditure: investments in 2016 will amount to €19m, compared with €35.5m in 2015. The firm is also pushing ahead with efforts to cut output costs and improve profitability.