MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK press.
Three to buy
Diageo
The Sunday Times
The drinks giant has had a rocky ride in recent years after US consumers lost their taste for whisky, and growth in emerging markets was scotched by turmoil in Brazil and a corruption crackdown in China. Yet there are signs of a turnaround, with the acquisition of George Clooney and Rande Gerber’s Casamigos tequila (the pair are pictured) boosting the US operation. The shares are not cheap, but “like a bottle of 40-year-old Brora single malt, Diageo is one to tuck away in the cellar”. 2,621.5p
First Derivatives
The Daily Telegraph
First Derivatives is the rarest of beasts – a market-leading software firm on this side of the Atlantic. Based in Northern Ireland, its Kx software monitors financial markets for signs of insider trading or manipulation. Customers include blue-chip names such as Deutsche Bank, the National Stock Exchange of India and the Shenzhen Stock Exchange in China. It has good cash generation, pays a dividend and its “breakthrough technology” promises more gains. 4,160p
Nichols
Shares
Sentiment has turned against the soft drinks maker after a profit warning and delivery issues. However, the sell-off looks overdone, creating an opportunity to buy into one of Aim’s most dependable consumer businesses. Nichols boasts a strong brand profile, a solid balance sheet and overseas growth potential. Its asset-light production model also makes it highly profitable. 1,477p
Three to sell
Ashmore
The Times
With banks and insurers pinned down by capital requirements and regulators, asset management can seem like the “sunny uplands” of financial services. This emerging-markets specialist has seen $7.9bn of net inflows for the past half-year pushing its assets under management up to $69.5bn. Yet investment flows in emerging markets can be volatile and Europe’s Mifid II reforms are a regulatory threat. With the shares trading at a premium, they look like a risky bet. 419.75p
Pearson
Investors Chronicle
News that 2017 earnings beat hopes will cheer those rooting for a recovery at the educational publisher. However, the boost came from a better-than-expected tax rate, with the firm “struggling just as much as ever” on an underlying basis. It has sold its better-quality businesses, including its stake in Penguin Random House last year, leaving it more exposed to the US education market. 680p
Unilever
The Sunday Telegraph
The consumer-goods giant has been “restocking its store cupboard”, with ten acquisitions last year including Tazo teas. Unilever is trying to reinvent itself in the wake of last year’s takeover approach by Kraft Heinz, but higher raw-material costs and “pitched battles” with retailers over price rises are complicating matters. 4,108p
And the rest
Investors Chronicle
Shares in GVC are worth a punt as the firm finalises the takeover of Ladbrokes Coral (940p). Intellectual property and translation business RWS Holdings has posted solid growth and low debt (483p).
The Mail on Sunday
With shares in online fashion retailer Boohoo (its wares are pictured) trading short of their peak, there is still time to buy in (187.25p). Card Factory’s shares are trading below their IPO price – investors may hold, but prepare for a “long wait” (202.5p). Clothing retailer Joules Group’s share price has soared 70% since the Brexit vote. Analysts think it could hit 400p (325.5p).
Shares
Keep buying power-switching tools designer XP Power; its latest trading update makes it a “hat trick” of positive updates (3,680p). Higher costs and potential strike action have weighed on Ryanair, but the shares could “fly higher” (€16.10).
The Times
Nafta trade talks have weighed on Tate & Lyle, but a contrarian might bet on its diversification into Asia (689.25p). Gym Group memberships rose by more than 33% last year with more growth to come (232.5p). Broadband supplier CityFibre has strong management and the support to challenge BT (57p). Attempts to commercialise graphene have failed, so a bet on Aim-listed specialist Versarien is “not for the faint-hearted” (96p).
A Swedish view
Telecoms firm Doro is changing, says Affärsvärlden. In 2016, CEO Jérôme Arnaud was replaced by Ericsson’s Robert Puskaric. Under Arnaud’s rule, Doro went from making analogue phones in the face of fierce rivalry and falling revenue, to being a niche maker of easy-to-use mobile phones for the elderly. Following 2015’s acquisition of digital alarm maker CareTech, Puskaric aims to bring the two together. Given the growing ageing population, digital gadgets are a cost-efficient way to improve health care. Doro’s unique market position justifies the price/earnings ratio of 18.
Retail-bond watch
Burford Capital, the London-listed firm that provides financing for legal cases, has announced its first dollar-denominated retail bond. The new bond, which will be traded on the London Stock Exchange’s order book for retail bonds (ORB), will pay an interest rate of 6.125% per year and will mature on 12 August 2025. The minimum subscription amount is $2,000 and the initial offer period runs until 6 February, although the offer may close early if demand is high. Burford has raised £365m from three retail-bond issues since 2014, all of which have proved popular with investors.