MoneyWeek’s comprehensive roundup of this week’s share tips from the rest of the UK press.
Three to buy
Gfinity
The Mail on Sunday
Watching other people play video games may seem odd, but “eSports have already gained more than 380 million fans worldwide”. Video games are no longer solely the province of teenage boys and Gfinity hopes to capitalise on the widening demographic. The shares should come good in the long term. 27.25p
MoneySuperMarket.com
The Sunday Times
Threats of an energy price cap have been weighing on this price-comparison group: energy giants have cut back on payments to its site to attract new customers.
More stringent regulation could be on the way from the Competition and Markets Authority. But statistics suggest the online-comparison sector has room to grow; bundling together different services could prove “lucrative”. 320.9p
Xafinity
Shares
A worsening UK growth outlook has increased the appeal of defensive stocks, and this pensions service provider is a top choice. It helps trustees of defined-benefit pension schemes with calculations and administration. More flexible pension rules are likely to increase demand for its advisory services, while the shares offer a 3.7% yield. 163p
Three to sell
ASOS
The Mail on Sunday
The respective fortunes of ASOS and M&S in recent years speak volumes about the relentless rise of online shopping. The “sassy online retailer” pays no dividends and its profits are lower than M&S’s, yet the two firms’ stockmarket valuations are edging towards each other. Nevertheless, analysts fret that UK sales growth may have slowed this summer. It is time to bank some profits. 5,681p
Metro Bank
Investors Chronicle
This challenger bank “has been growing its loan book and customer deposits at an extraordinary rate” since its shares were listed last year. An integral part of the group’s strategy is to present itself “as more of a retailer than a bank”, but the branch network it needs to do this doesn’t come cheap. The shares are highly valued and the market is ignoring the risks. 3,491p
Royal Mail
The Times
It is almost four years since the government privatised Royal Mail, and the shares have lost a little over a tenth of their value. “The government did not do too badly” out of the sale, but shareholders have had a tougher time, especially after the group’s relegation from the FTSE 100 last week. Uncertainty over pensions arrangements and a staff pay deal mean the shares are best avoided. 392p
And the rest
The Daily Telegraph
Buy into rising profit margins and falling debt at industrial threads maker Coats (79.5p). Aim-listed promotional items supplier 4imprint has plenty of scope to consolidate a fragmented market (1,768p). Shares in pharmaceuticals business Shire have fallen too far, given the group’s solid fundamentals (3,913p).
Investors Chronicle
Growth investors looking for exposure to frontier markets should consider BlackRock Frontiers Investment Trust (152.9p). Fuller, Smith & Turner is a UK pubs stalwart and the shares are going cheap (1,000p). Government plans gradually to phase out internal combustion engines have hit Johnson Matthey’s share price, but the market is overplaying the risks (2,779p).
Shares
Take advantage of the weak share price at advertising giant WPP to buy a high-quality firm at a discount (1,416p). GlaxoSmithKline has emerged stronger after seeing off competitive threats to its HIV and asthma treatments (1,524p). Half-year results showed progress at software specialist Sopheon, but the share price still hasn’t taken off (337.5p).
The Times
The share prices of leading financial spread betters such as CMC Markets, IG Group and Plus 500 have been “in the sink” of late, but look to be on the cusp of a strong rebound (151p; 640p; 915p). Investors should steer clear of Petrofac as it hunkers down for a Serious Fraud Office probe, while market conditions remain challenging (413.5p).
A German view
Now that the gold price has found its feet, it’s worth considering a punt on a gold miner, according to Wirtschaftswoche. Gold miners get a double boost from a firmer gold price; their sales go up and their reserves become more valuable. The best bets are miners that operate in politically stable environments – so governments aren’t tempted to grab the profits – and have low production costs, such as Canada’s New Gold, which has 90% of its reserves in its home country and also operates in Australia, Mexico and America. New Gold is aiming to produce 330,000-370,000 ounces this year, while its new mine, Rainy River in Ontario, could almost double the group’s output. The cost of production is $737 an ounce, a figure that makes it one of the sector’s most cost-effective operators.
IPO watch
The Italian tyremaker Pirelli, bought by state-owned China National Chemical (ChemChina) in 2015, will sell 40% of its equity in an initial public offering (IPO) in October 2017 that will mark the group’s return to the Milan Stock Exchange. The relisting of the world’s fifth-largest tyremaker will test demand for a streamlined company that now focuses on high-end consumer tyres, says Reuters. The less profitable truck and industrial tyre business has been folded into a unit of ChemChina. The latter acquired Pirelli, one of Italy’s most famous brands and a stockmarket stalwart since 1922, for more than €7bn in 2015; it was delisted shortly afterwards. Pirelli reported a profit of €67.6m in the first half of the year and expects sales to grow by 9% per year between 2016 and 2020.