MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK’s financial press.
Three to buy
Breedon
Investors Chronicle
The construction-materials firm has seen a 50% rise in pre-tax profit for 2016.
The earnings momentum is likely to continue as infrastructure spending rises and the housing sector expands. The impact of Brexit and sterling weakness are potential risks, but the UK economy has proved resilient. 75.75p
Imperial Brands
The Sunday Telegraph
Higher tobacco taxes and plain packaging rules are forecast to hit Imperial’s sales. However, global population growth is likely to undermine governments’ attempts to curb the industry even as smoking rates decline. Recently acquired brands in the US have improved prospects, while speculation about an approach by Japan Tobacco should “puff up” the shares before too long. 3,749p
Totally
The Mail on Sunday
This healthcare business was originally set up to provide NHS-sponsored telephone coaching for people with long-term health conditions, such as emphysema, and has since added physiotherapy and dermatology operations to its stable. The NHS outsourcing market is worth £20bn and is growing as hospitals search for innovative ways to reduce waiting lists. 55.5p
Three to sell
Centrica
The Times
The British Gas owner is in the firing line as politicians queue up to take action on high energy prices. However, with an election campaign to fight the details of any intervention won’t be known until summer at the earliest. The dividend is still attractive, but a price cap could bring further pain and the political uncertainty will weigh on the share price until then. 207.75p
Distil
Shares
Shares in the “alcoholic drinks minnow” have doubled since February after an update showed strong volume and revenue growth. Yet a 102% profit rise in two months “is too good to ignore”, especially if momentum runs out of steam and others start taking profits. Distil has a weak balance sheet and operates in a “highly competitive market”. Bank those “handsome profits” now. 3p
Just Eat
The Sunday Times
The pioneer of online takeaway ordering is now valued at nearly £4bn, with its shares up “handsomely” since floating in 2014. The firm boasted a 31% profit margin last year, but a rise in its commission rate has exasperated restaurants just as Deliveroo, Amazon and Uber start to take market share. It may yet suffer the fate of many pioneering firms as larger rivals move in. 580.5p
And the rest
The Daily Telegraph
Brunner Investment Trust is a global equity investment trust that is slowly freeing itself of its costly debt and has been a reliable dividend payer for 45 years (691p). Markets tend to undervalue complicated businesses such as specialist plastics manufacturer Low & Bonar, leaving good opportunities for bargain hunters (87p).
Investors Chronicle
Rockhopper Exploration has had problems with its flagship oil field, but may offer value for those with “strong stomachs” (21p). The potential for a special dividend at recruiter Hays may drive the shares up (170p). The $360m acquisition of US-based SummitReheis could prove “transformational” for chemicals group Elementis (293p).
Shares
Retail meat packer Hilton Food, which supplies Tesco and Coop Danmark, is a good defensive pick (714.5p). Fulham Shore, which owns pizza chain Franco Manca, has a recipe for success (21.25p). Rebounding profits at food and clothing retailer Associated British Foods should tempt investors (2,697p). Building products specialist Epwin offers a solid 6.5% yield (113.25p).
The Times
Emerging-markets fund manager Ashmore Group has produced an encouraging trading statement (343p). Warehouse-focused real-estate investment trust Segro has growth potential (480p). Investors should sell Royal Bank of Scotland before the government dumps some of its 73% holding (240p).
A Singaporean view
Sarine Technologies makes tools for the diamond trade, such as inclusion mapping systems, which help determine the best way to cut and polish a diamond. The firm’s chairman, Daniel Glinert, reckons the industry is nearing a full recovery after a tough couple of years, says The Edge Singapore. Demand is strengthening in the US, which accounts for 40% of the polished diamond market, and in Asia, which accounts for another 40%. Prices of polished diamonds are holding steady, while those of rough diamonds have dropped. Margins for producers of polished diamonds and jewellery are consequently improving, which means they are more willing to invest in new tools. Hence Sarine saw revenue leap almost 40% last year, to US$72.5m, while earnings surged fivefold, to US$17.9m.
IPO watch
Istanbul-based Global Ports Holding (GPH), the world’s largest cruise port operator, is to list on the London Stock Exchange. It operates 14 cruise ports in eight countries around the Mediterranean, plus Singapore, serving 7.8 million passengers, as well as two commercial ports. It is 89.2% owned by Global Investment Holdings, which is listed on the Borsa Istanbul and will remain a major shareholder. GPH will issue $75m-worth of new shares and have a total market capitalisation of $250m. It intends to use the proceeds of the initial public offering to develop new ports, and is looking at acquisitions in Europe, the Caribbean and Asia. It had revenues of $114.9m in 2016, with earnings before interest, tax, depreciation and amortisation (Ebitda) of $80.9m.