A roundup of the best share tips from the financial pages of the UK press.
Three to buy
SSE
Shares
Shares in the big six energy supplier are down 5% since September as rising bond yields take the shine off utility stocks. However, SSE yields 6.1% on the current share price and has a long record of delivering inflation-beating dividend growth. New clean electricity projects are now coming on stream too. 1,491p
Severn Trent
The Sunday Times
Shares in the debt-dependent water giant have fallen 15% in the last few months over concerns about rising interest rates. Yet last week, overseas investors bought National Grid’s gas pipe network at a “whopping” premium. Savvy infrastructure investors are adept at spotting value and Severn looks interesting. 2,147p
Hotel Chocolat
The Mail on Sunday
The chocolatier, which floated on Aim in May this year, has 91 shops and a thriving online arm. Underlying pre-tax profit jumped by 181% in the year to June and further strong growth is expected. Its founders own two-thirds of the business, so they are more aware than most bosses of the needs of investors. With Christmas just around the corner, now is the time to buy this well-run company. 264.25p
Three to sell
Pearson
The Daily Telegraph
Shares in the academic publisher received a minor boost from the dollar’s rally, but long-term investors should sell this “structurally challenged” company. US student enrolments are slowing and universities are using more open source materials. Management is making cost savings, but with underlying sales down by 7% in the first half, the bigger worry is a sinking top line. 786.75p
Sports Direct
Investors Chronicle
First-half results at the “beleaguered retailer” showed underlying cash profit down by 33.5% as currency and corporate governance issues take their toll. Analysts had expected the figures to be poor, but with margins cracking, the shares fell a further 8% on the release of the results. With at least one broker predicting a further downgrade, “we see continued risk here”. Sell. 290p
Victrex
The Times
Victrex enjoys some of the highest margins in the chemical industry thanks to its PEEK polymer – the “caviar of plastics”. But it is so expensive that customers are buying cheaper substitutes. Group sales in the year to September were down 4% and pre-tax profits down 6%. For a group struggling to grow the top line, the current valuation of 17 times earnings now looks generous. 1,758p
And the rest
Investors Chronicle
A successful debt refinancing and improved trading makes pub group Enterprise Inns a speculative buy (107p). Broadcaster ITV is diversifying its income away from volatile advertising revenue (170p). Energy-storage firm RedT Energy could plug into the growth of the renewable energy market (12.5p).
Shares
Blancco Technology is carving out a profitable niche in cyber-security with its digital erasing specialism (325p). The £377m sale of Cambian’s adult care business will enable the social-health provider to pay down debt (136.75p). Profits are soaring for EasyHotel as the low-cost hotel operator expands in Britain and Europe (93p). IMIMobile, the mobile commerce specialist, is a standout performer in its sector (158.5p). The weak pound will stimulate tourism, which should be good for luxury shoe firm Jimmy Choo (133p). Telford Homes’ exposure to London’s build-to-rent housing market should pay off (319p).
The Daily Telegraph
Lloyds Banking Group will become a dividend machine once its payment-protection insurance fines end (61.5p).
The Times
The shift to internet shopping will help packaging firm DS Smith (419p). Online estate agent Purplebricks will shake up the market (157p). Tritax Big Box has a hefty yield and the warehouses it owns are in demand (134p).
IPO watch
Kazakhstan is pitting the London and Hong Kong stockmarkets against each other as it gears up to sell off up to $6.5bn worth of its largest state-owned companies, says James Kynge in the Financial Times. The country’s national airline, Air Astana, which is 49% owned by BAE Systems, is on the list, as is the state-owned oil and gas company, KazMunaiGas. Also slated for sale are the national rail operator, the national mining company, and electricity utility Samruk Energy. A statement from Samruk-Kazyna, the country’s sovereign wealth fund, said the listings could happen next year. The country had originally intended to list the companies on its own exchange in the Astana International Finance Centre, says Kynge, but that is unlikely to be operating before 2018.
A German view
Eckert & Ziegler is such a small company that it doesn’t even qualify for inclusion in the SDax, Germany’s small-cap index, as Wirtschaftswoche points out. That means the shares are volatile and risky, but they still look worth a nibble. The firm is a pharmaceutical equipment manufacturer in the field of nuclear medicine, making radioactive components used in radiotherapy and X-rays. It has managed to grow annual sales from €10m in 1999 to a projected €150m next year, thanks in part to two recent acquisitions, including the takeover of a company specialising in transporting radioisotopes in the fast-growing Brazilian market. Eckert & Ziegler has cut costs by €5m in the past year and boasts a strong balance sheet. The stock trades on a price/earnings ratio of 15 and yields 2%.