MoneyWeek’s comprehensive guide to this week’s best share tips from the rest of the Uk’s financial press.
Three to buy
Centrica
The Sunday Times
Utilities used to be dull but sturdy, yet the owner of British Gas has lost half its market value in three years in the face of overzealous regulation, rising competition and the “spectre of an energy price cap”. Management is now investing in more flexible power generation and “connected home” technologies. After such steep share-price falls, the firm is at least worth a look. Buy. 201p
Coats
The Sunday Telegraph
Things are looking up for threadmaker Coats after a £255m deal with the pensions regulator to resolve a long-running spat. The shares have risen by 33% in the year to date, bringing promotion to the FTSE 250. July’s interim results could prove a catalyst for further growth. 76.25p
Ramsdens
Shares
This small-cap pawnbroker, jewellery retailer and currency-exchange operator sells on just 11.3 times forecast earnings. Volatile gold prices are always a risk, but previous slumps have let Ramsdens snap up market share. Those who worry about the UK economy should remember that pawnbrokers do well in tougher economic climates.
A 4.6% dividend yield should tempt any doubters. 142p
Three to sell
Biffa
The Times
Recent results at the waste-management firm were broadly in line with expectations. But the waste-to-energy division is a drag on growth and the firm made a loss after shelling out hefty fees to list on the stockmarket last October. The underwhelming flotation overshadows the stock, and there is a risk that the firm’s private-equity backers could sell up soon. It’s best avoided. 195.5p
Carillion
The Daily Telegraph
Investors should bear in mind the hefty pension deficit and net debt pile at this support-services firm, which leaves “little margin for operational error”. On paper, the 9.4% yield looks attractive, but the shares have now slipped below the 200p mark – not seen since the dark recessionary days of 2008 – which implies that the market simply “does not believe the numbers”. Steer clear. 197p
Monitise
The Times
After years of ridicule as “the company that failed to live up to its name”, the mobile-payments firm looks set to “be put out of its misery” after a 2.9p per share offer from US fintech company Fiserv. Monitise was once a stockmarket darling, but the shares have been hammered after a stream of revenue warnings and management departures. A turnaround seems unlikely. Sell. 2.8p
And the rest
The Daily Telegraph
The first post-crisis dividend from bank RBS could surprise on the upside (252.25p). Car dealer Motorpoint has published encouraging results (150p). Dividend growth at the Standard Life Equity Income Trust has averaged 5.7% a year over the last five years (436.5p).
Investors Chronicle
Clothing retailer Joules has stronger growth momentum than most high-street retailers (298p). Aviation support-services firm John Menzies should grow earnings as it expands into North America (723p). XLMedia is one of the world’s largest producers of “clickbait”-style gambling websites and offers a 5.2% dividend yield (122p). The “ever-rising tide of financial-services red tape” means bright prospects for outsourcer Equiniti (220p).
The Mail on Sunday
US energy producer Diversified Gas & Oil is a solid bet and is determined to pay a “rapidly increasing dividend” (71p).
Shares
Catering giant Compass is a solid pick (1,659p). Events business Informa is attracting interest (680p). Interior furnishing group Walker Greenbank is well placed for earnings growth (203.5p). IT firm Iomart is “among the best cloud plays on the UK market” (325.25p).
The Times
Hospital group Spire Healthcare is a takeover target (340.5p). Tobacco firm BAT offers solid income (5,464p). Online estate agent Purplebricks hopes to crack the US (400p). Power-station operator Drax may yet surprise investors (330p).
A German view
Few outside Switzerland have heard of it, but Zurich-based Barry Callebaut makes a quarter of the chocolate and cocoa products consumed worldwide. It was founded in 1842 and is the leading producer of cocoa powder, chocolate fillings and glazes; clients include Nestlé, Unilever and Mondelez. The stock recently hit a record high, but there should be more where that came from, says WirtschaftsWoche. Demand is steady in western Europe and the US, but expanding quickly in Asia, as the new middle classes develop a sweet tooth. Barry Callebaut has just increased its presence in the region, expanding production facilities in Singapore and Indonesia. Asian sales volumes jumped by 15% year on year in the first half. The group looks set to boost its bottom line by a fifth to CHF280m in the year to September.
IPO watch
The latest online food-delivery service to list on the stockmarket – joining America’s GrubHub, the UK’s Just Eat and the Netherlands’ Takeaway.com – is German firm Delivery Hero, says Guy Chazan in the Financial Times. Berlin-based Delivery Hero operates in 53 countries in Europe, Latin America and the Middle East, where it employs more than 6,000 people to deliver food from local independent outlets. By offering 39 million shares priced between €22 and €25.50, it is hoping to raise almost €1bn when it floats on the Frankfurt Stock Exchange later this month. The initial public offering (IPO) values it at €4.4bn. It is 35% owned by Berlin-based start-up incubator Rocket Internet and the flotation will be the first of any firm Rocket has invested in since its own IPO in 2014.