The stocks and shares the British press is tipping – and recommending you avoid – this week.
Three to buy
Belvoir
Mail on Sunday
Founded in 1995 by a former RAF wing commander, letting group Belvoir is now the biggest franchise letting group in the UK property market with more than 300 outlets. Dividends are generous and Belvoir’s franchise model allows it to grow fast. Its size gives it clout in dealing with online start-ups, such as Zoopla and Rightmove. “Brexit or not,” Belvoir is growing. 121p
Cobham
Shares
The Poole-based defence specialist has been sold off heavily, but boasts industry leading positions in air-to-air refuelling and satellite communications. Defence spending accounts for 60% of its business and the market is improving, as military budgets are rising. Management has overspent on acquisitions in recent years, leaving the company too indebted, but the bad news is already factored into the share price and the dividend yield of 4.4% is now worth going for. 144p
Hostelworld
Investors Chronicle
Hostelworld was founded in Dublin in 1999 and almost half of all its bookings are for rooms in Europe. An advertising campaign to boost business is weighing on margins, but Hostelworld is the king of its niche. Its balance sheet is healthy and the company has a tantalising dividend yield of 9%. Insiders are hoovering up shares. 146p
Three to sell
Carpetright
The Daily Telegraph
Carpetright has never fully recovered from the recession in 2008. It is working on a turnaround: closing unprofitable warehouses, refreshing its logo and opening smaller shops on the high street. But sales are falling and the turnaround is costing money. At 12-times earnings, Carpetright looks vulnerable to any “Brexit-induced recession”.
219p
Filtronic
Shares
Filtronic sells microwave components to broadband providers. It expanded its factory in Leeds in May and the CEO is upbeat, but investors have been through 30 months of disappointment as orders have fallen. The firm was forced to raise cash in a deeply discounted share placing, leading to the departure of the former CEO. Shares are rising, but it’s “a false dawn”.
11p
Foxtons
The Daily Telegraph
The London-based estate agent has gone from an all-time high to an
all-time low in less than a year. It is almost uniquely exposed to the frothiest parts of London’s housing bubble. Both its lettings business and sales look likely to take a hit. Profits could fall by as much as half, warns brokerage Peel Hunt. There’s no reason to take the plunge, even at rock-bottom prices.
104p
And the rest
| Buys | |
|---|---|
| Abcam | The antibody specialist is in a new phase of growth (Investors Chronicle) 651p |
| Henry Boot | Shares are too cheap at the land bank specialist (Invest. Chr.) 209p |
| Iomart | The Glasgow-based firm is a good play on cloud computing (Shares) 259p |
| IS Solutions | Revenue is surging at the data specialist (Mail on Sunday) 116p |
| Majestic Wine | Acquisitions are paying off and sales are fizzing higher (Shares) 447p |
| Photo-Me | Sales are surging in Japan and turnover has trebled since 2014 (Shares) 131p |
| Schroders | The asset manager is diversified and winning new business (Inv Chr) 2,585p |
| Sells | |
| Debenhams | The retail environment is tough and its turnaround is stalling (Telegraph) 70p |
| easyJet | How easyJet will cope outside the EU “is a mystery” (Sunday Times) 1,313p |
| Rio Tinto | Rio has bounced off lows but its future is hanging on China (Telegraph) 2,031p |
| Taylor Wimpey | Shares have halved since May, but uncertainty is too high (Telegraph) 116p |
Directors’ dealings
Non-executive director Jim Lawrence is making all the right noises at Smurfit Kappa, the corrugated cardboard company. Lawrence was previously head of the US arm of Rothschild, so was a hefty board appointment for the Irish firm last year, which churns out packaging from 370 sites globally, making it one of the world’s biggest packaging producers. Lawrence has had stints at Unilever and PepsiCo, so knows the companies Smurfit supplies. He is also backing the firm, buying £3.5m of shares this month. “Some commitment,” says the FT.
An American view
“Hobbyist farming is enjoying a new golden age”, says Reshma Kapadia in Barron’s. Chalk it up to “two megatrends”: baby boomers getting older, and the organic food craze. Retirees are farming everything from kale to cattle, and Tractor Supply is helping them do it. Its products include light truck equipment, lawn and garden products, and clothing.
The company is expected to grow sales by 4.4% this year while much of the sector is treading water. It has a market value of $12.5bn and debt of only $250m, so it is having no trouble funding the opening of 120 shops a year. Its bulky products reduce the threat of online competition. It’s “one of retailing’s best long-term growth stories”.