MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK press.
Three to buy
National Grid
Shares
The UK’s largest listed utility is set to return billions of pounds to shareholders this year after the sale of a 61% stake in its gas distribution network. Yet investors remain cautious because the prospect of an interest-rate rise this year has reduced the attractions of high-dividend stocks. Take the opportunity to buy in for an inflation-beating yield of 4.7%. 983.5p
Admiral
The Sunday Times
Shares in insurance firms fell last month due to new rules on how compensation payments are calculated. Admiral says that the change will cost it about £150m, but that’s a “one-off impact” for a firm that “continues to grow strongly” as it moves into car finance and expands overseas. The business could also be a takeover target since co-founder Henry Engelhardt stepped down as chief executive last year. 1,941.5p
Fidelity Asian Values
The Mail on Sunday
There are six times more companies listed in Asia (excluding Japan) than in Britain, yet many of these fast-growing firms are unknown to UK investors. This investment trust has invested in about 160 firms – everything from a Sri Lankan brewer to a Bollywood film studio – and has delivered impressive results. 387p
Three to sell
Lonmin
Investors Chronicle
The South African platinum producer is “stuck between a rock and a hard place”. Low platinum prices mean that it’s “burning through cash”, but if it cuts output then revenues will suffer and relations with its workforce could worsen. The sudden departure of the group’s widely respected chief operating officer for personal reasons will bring more difficulties. 87p
SIG
The Times
The building-materials supplier saw underlying pre-tax profits fall 19% last year as a price war took its toll. Debt has risen to more than two times earnings, leading to a dividend cut and speculation that a rights issue could follow. The shares have started to recover, but higher inflation in the UK and ongoing competitive pressures means recovery is “some time away”. 115p
Onesavings Bank
The Times
The challenger bank, which specialises in buy-to-let lending, saw its loan book grow 30% last year to £5.9bn. Business remains robust and the shares have picked up of late – perhaps in part because of a recent approach by private equity for Shawbrook Bank, which is a similar type of business. However, the shares look dear – they trade on more than twice book value. 403.75p
And the rest
The Daily Telegraph
AmerisourceBergen, a US wholesale drug distributor, is growing fast and could benefit from Trump’s proposed corporation tax cuts ($88.81). Shares in advertising group WPP look cheap on 13.5 times earnings, despite strong earnings growth (1686.5p).
Investors Chronicle
Shares in life assurer JRP Group fell on fears that pension changes would affect annuity sales, but business is holding up (150p). General Motors’ sale of its Opel and Vauxhall brands will enable it to focus on its better-performing US truck and Chinese car businesses ($36.83). Building-products supplier Tyman is seeing strong growth in its US business, helped by acquisitions and weak sterling, but the market is yet to catch on (304p).
Shares
Industrial landlord Segro will profit from a deal to buy airport properties (454.5p). Consumer products giant PZ Cussons has good brands and a strong balance sheet (325.5p). Anglo African Oil & Gas is planning “juicy dividends” (26.25p). Shares in funeral-services provider Dignity have dipped but the firm remains a good-quality investment (2,498p).
The Times
Balfour Beatty has turned itself around in the last two years (271.5p). A recent share-price fall at NHS software provider Emis presents a buying opportunity (878p). Merchant bank Close Brothers enjoys a strong position in several markets (1,560p). Shares in Hikma Pharmaceuticals are volatile, but look cheap for the sector (2,297p).
A German view
France’s Saint-Gobain is one of the world’s oldest companies. It dates back to 1665, when it designed the mirrors at Versailles for Louis XIV. Since then, it has grown into one of the world’s biggest building materials groups, with products ranging from high-performance materials such as polymers, to insulation, roofing and pipes. Sales rose to €39.1bn last year, and operating profits increased by 7% to €2.8bn. Saint-Gobain operates in 66 countries, and its geographic spread, along with its diversified product portfolio, makes it more resilient to downturns than many peers. At the same time, as Wirtschaftswoche points out, its wide reach means it tends to profit more than most from a broad recovery of the kind the world economy now seems to be enjoying (see page 7). It yields 2.7%.
IPO watch
Tufton Oceanic Assets is an investment trust that aims to deliver “an attractive level of regular and growing income and capital returns” by investing in secondhand commercial sea-going vessels. It is targeting a dividend yield of 5% in the first year and 7% next year. Because of the “financial stress” in the shipping industry, there is an abundant supply of second-hand vessels, which it expects to be available at attractive prices. The company hopes to lease out its ships on medium- to long-term charters with “carefully chosen” counterparties, which it hopes will mean that it will not be too badly affected by fluctuations in the general shipping markets. It is hoping to raise $150m, which it will invest over the following year in around 12-18 vessels.