MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK’s financial pages.
Three to buy
Imperial Brands
Motley Fool UK
Demand for cigarettes has fallen in the UK, with average daily consumption now down to less than one-third of its 1973 peak. Yet sales of traditional tobacco products at the West-to-Gauloises maker are holding up well and it is also making inroads into the burgeoning “next-generation” market through significant investments in Canadian cannabis operators. The shares trade on a “muted” price-to-earnings ratio of 13.2, which is cheap compared with other FTSE 100 firms and a reasonable entry point into a good defensive stock. 2,136p
Inditex
Money Observer
British investors looking to diversify their income should remember that dividends do not end at Dover. European companies have improved their willingness to hand over their profits in recent years. One of the best examples is this Spanish retailer, which owns high-street chain Zara. Between 2001 and 2018 the dividend grew at a 24% compound annual-growth rate, with a cumulative €20bn paid out to shareholders. €26.87
Softcat
Shares
The world is moving online, but for many small and medium-sized businesses and public-sector bodies, managing a raft of different IT products is a challenge. This FTSE 250 business solves that problem by acting as a “trusted point of contact” for clients, offering advice and selling on third-party software and hardware. Revenue has jumped from £50m to £1bn over 15 years and Softcat is now the UK’s second-largest value-added reseller. A 2020 price-to-earnings multiple of 26.8 is not cheap, but the market is underestimating the growth potential. 959.5p
Three to sell
Berkeley Energia
The Sunday Times
This aspiring uranium miner is pinning its hopes on a project near Salamanca, Spain. The plan to extract nuclear fuel in a stable country that is close to end markets in western Europe carries obvious attractions. Yet that may also prove its undoing. Nuclear energy brings tricky politics and the Spanish government has been dragging its feet about granting permits. The shares have fallen more than 60% in the past year – but barring a sudden change in the political picture in Madrid, they could yet “have further to fall”. Sell. 15.75p
Lookers
Investors Chronicle
The UK’s largest vendor of Mercedes-Benz vehicles appears vulnerable as a cocktail of risks – including low consumer confidence, retail-sector woes and new emissions regulations – take their toll on the shares. The car industry depends on frictionless and tariff-free trade between the UK and Europe, prompting industry lobby groups to warn about the dangers of a no-deal Brexit. Yet Lookers’ forecasts are based on the assumption that Britain leaves the EU in an orderly fashion. That hope could prove a hostage to fortune. 45.25p
Sports Direct
The Daily Telegraph
There is so much going wrong at Mike Ashley’s high-street retailer that “it’s hard to know where to start”: delays to its biannual results, “terminal” problems at recently acquired House of Fraser and a shock £605m tax demand by Belgian authorities. Management appears to have been distracted by a string of acquisitions, which have included Game Digital, Sofa.com and Evans Cycles. It’s time for investors to admit defeat. 214.5p
…and the rest
Investors Chronicle
National Express’s decision to quit UK rail two years ago and focus on its international bus operation looks prescient as rivals are continuing to struggle. A forecast dividend yield of 4.2% is appealing (425p). Impressive growth looks set to continue at textile rental and cleaning specialist Johnson Service (169.5p). Wealth manager AFH Financial boasts a “clear acquisition-led strategy in a structurally undersupplied and fragmented market” (344p).
The Mail on Sunday
British Gas owner Centrica’s shares are at their lowest point since 1997 amid woeful performance – investors should “Tell Sid” to sell (73p). Cash-generative Greggs bargain offering leaves the bakery chain well-placed to ride out any economic downturn (2,190p).
Shares
Miner Centamin is starting to “win back the market’s favour” after previous disappointments (129.5p). Shares in Irn Bru-maker AG Barr are down almost 40% since June after a punishing profit warning – this could be an opportunity to buy into a defensive soft-drinks business on the cheap (620p). Rising US healthcare costs are a long-term tailwind for billing and healthcare analytics software supplier Craneware (1,875p). Premium drinks maker Fever-Tree’s shares have been on a rollercoaster ride, but growth prospects in America make it time to buy (2,079p).
The Times
Brexit woes, staff pay rises and a price war have driven shares in Ryanair to a four-and-a-half-year low, but history shows that the airline always comes out ahead of the competition – buy (€9.54).
A German view
The “micromobility” market, encompassing electric bicycles, scooters and kick scooters, is starting to motor, says German business weekly Der Aktionär. McKinsey reckons it is expanding twice as fast as the car-sharing sector and could be worth $500bn worldwide by 2030. No wonder: a quarter of the world’s population live in cities with over one million inhabitants, and surveys suggest that 15% of this group could opt for a smaller, nimbler alternative to a car. This bodes well for China’s Nasdaq-listed Niu Technologies, which sells high-end scooters that can travel for up 100km without recharging. A partnership with Volkswagen has put a rocket under revenues – Niu should be in the black by next year.
IPO watch
Vodafone has revealed plans to spin off the business that operates its network of European mobile-phone transmission towers and list it on the stock exchange by 2020 in a bid to reduce its huge debt pile. The listed company would be Europe’s largest tower operator, with 61,700 masts in ten countries, and could generate annual revenue of €1.7bn and profits of €900m, reckons Barron’s. It should be operational by next May. Vodafone has spent big on 5G licences – almost €4bn in Germany and Italy and £317m in the UK, which contributed to the €7.6bn annual loss it posted in May. The sale could bring in as much as €20bn, says The Guardian.