MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK’s financial press.
Three to buy
Burford Capital
Shares
Litigation finance provider Burford Capital funds lawsuits in return for a share of the compensation award. The market is still maturing, and earnings can be lumpy owing to unpredictable court decisions, but the firm has a range of expertise that potential competitors would find difficult to replicate. The share price has made substantial progress over the last 12 months, and there could be more upside in store. 734p
SSP
The Sunday Telegraph
SSP’s brands include Upper Crust and Le Grand Comptoir. Growth has been accelerating in recent years and the firm has its sights set on expansion, both abroad through ventures in India and the US, and domestically. The shares have “virtually doubled” since flotation in 2014, so a lot of good news is already priced in. Nevertheless, SSP is a long-term buy. 414.25p
Hays
The Mail on Sunday
Recruitment specialist Hays finds work for white-collar and professional workers. Net fees in the UK fell 10% in the six months to December thanks to post-Brexit caution. But Hays operates in 33 countries and overall activity has been picking up. With special dividends in prospect this year and next, Hays is a “solid buy, particularly for income-seekers”. 159.5p
Three to sell
Aggreko
Investors Chronicle
Results for 2016 showed “pre-tax profits in line with market expectations” at the temporary power equipment specialist, yet the shares fell 13% on the news. It seems a 20% fall in operating profit caused by weakness in the group’s US business and bad news from Argentina has spooked the market. Yet despite Aggreko’s evident problems, the shares are still overpriced at 16 times forecast earnings. 913p
Game Digital
The Daily Telegraph
Don’t be tempted by the 7.2% yield from the video-games specialist. Last year’s figures were “ugly”, and a recent trading update offered “little encouragement”. The firm is still too dependent on “video console launch cycles” to turn a profit. Management is trying to develop other revenue streams, but the market is “fiercely competitive”, and that dividend yield may not be safe for long. 43.5p
Ocado
The Sunday Times
The online supermarket has just opened a third warehouse, and it claims that its robots there can “pick 50 items in ten minutes”. But this technology does not come cheap – £175m this year, following £153m spent last year. The company now faces a new challenge from Amazon. Until the figures start to show that Ocado can reliably turn a profit, investors would do well to sell. 258.5p
And the rest
Shares: Retailer Card Factory is a “screaming buying opportunity” at the current price (273.p). Oil-services business Amec Foster Wheeler could represent a high-risk bargain (449.25p). Distributor UP Global Sourcing is still not on the radar of most investors (155.5p).
Investors Chronicle: Demand for offshore oil services is picking up again at marine-engineering company James Fisher and Sons (1,598p). Car dealer Inchcape boasts good defensive characteristics (796p). There could be “noteworthy upside” at engineering contractor Meggitt if management succeeds in boosting margins (459.5p). A growing loan book and low leverage more than justify Secure Trust Bank’s price (2,150p).
The Daily Telegraph: Supermarket Sainsbury offers defensive value, especially since its purchase of Home Retail Group last year (266.5p).
The Times: Shares in builders’ merchant Grafton Group were hit hard after the referendum on Britain’s EU membership, but its Irish and Dutch businesses should deliver growth (657p). Breedon Group’s £336m purchase of Hope Construction Materials last year should start to bear fruit (79.5p). Equiniti Group, which provides share registration and pension administrations, offers a “highly reliable” income (190p). Insurer Aviva’s shares look cheap given a strong balance sheet and cash surplus (544p). On 14 times earnings, packaging firm DS Smith still represents good long-term value (447p).
An American view
Shares in Ball, a global metal-packaging giant, “have been crushed” in the past few months, says Reshma Kapadia in Barron’s. Investors are worried that the group, which makes 75% of its sales from beer and soft drink cans and another 13% from aerosol and food packaging, has bitten off more than it can chew by buying its UK rival Rexam for $8.5bn. But the management has “an excellent track record” and should be able to integrate the purchase without too much trouble. The longer-term outlook is also encouraging. The consumption of sugary, fizzy drinks is declining while energy drinks and craft beer are on the rise. That implies growing demand for the wide range of specialised cans – 27 different sizes and shapes in North America alone – that Ball has invested in of late.
Retail bond watch
Greensleeves Care is a charity that manages 20 care homes for the elderly across England. The organisation was spun out from the Women’s Royal Voluntary Service in 1997. It is now issuing a retail charity bond offering a return of 4.25% per annum, with a maturity date of 2026. The bonds will be issued by Retail Charity Bonds, a special purpose vehicle that issues bonds on behalf of charities, and an unsecured loan will be made to Greensleeves with the proceeds. The bonds, which will be listed on the London Stock Exchange’s order book for retail bonds, can be held in an individual savings account (Isa) or self-invested personal pension (Sipp). The offer was scheduled to close on 24 March, but high demand meant it closed earlier, on 14 March.