MoneyWeek’s comprehensive guide to this week’s share tips from the rest of the UK financial press.
Three to buy
Wincanton
The Mail on Sunday
Wincanton is a sizeable player in the logistics sector. Lorries and warehousing may be the “unsexy part of business”, but the shares come with an attractive 4.3% dividend yield. Wincanton has now “turned the corner” after a difficult few years during the recession, yet the market still hasn’t caught up with the progress made and an upgrade could be on the cards. Just watch out for the large pension deficit. 208p
OneSavings Bank
The Daily Telegraph
If and when interest rates rise, all banks should benefit, but OneSavings Bank is particularly appealing. As a challenger bank it has lower costs than traditional providers, but unlike rivals such as Tesco or Virgin, it focuses on buy-to-let lending. New tax and regulatory changes to buy-to-let are a challenge, but could end up making the whole sector safer if the Bank of England is to be believed. Buy. 330p
Burberry
Shares
The luxury retailer has reported a 19% rise in adjusted operating profit on the back of sterling’s weakness: it makes most of its sales overseas. Its shares are up 28% since the Brexit vote and analysts see scope for sales and margin growth. But keep an eye out for any weakness in key markets Hong Kong and China. 1,418p
Three to sell
Mitie
The Sunday Times
Half-year results at the outsourcer look set to be “ugly”. The share price is down by a fifth since September’s profits warning, and there are questions over accounting policies, “razor-thin” margins and £178m of debt. The outgoing CEO says she wants to spend more time with her children. “Investors may want to spend more time investing their money elsewhere.” 190.5p
British Land
The Times
Shares in the property company are “still a long way below” their pre-referendum value because of fears about its heavy exposure to the London property market. Despite this, there are signs that the London market is holding up better than expected. Nevertheless, investors can get the same 5% dividend yield without the ongoing uncertainties by shopping around elsewhere. 592.5p
Great Portland Estates
Investors Chronicle
The West End landlord says post-referendum uncertainty has dented its performance, although London rental values have not fallen by much yet. More concerning is the “savage” devaluation of its portfolio by market analysts. Investors Chronicle tipped Great Portland back in 2014,
but with a paltry dividend and poor market sentiment, the time has come to sell. 618p
| Buys | |
| Auto Trader | The small-cap media firm could thrive if Trump stimulates the US (Shares) 1,663p |
| Bodycote | The engineering group has boosted margins (Investors Chronicle) 585p |
| Cranswick | Investors who missed the Tesco rally can still buy its food supplier (Shares) 2,216p |
| Crest Nicholson | The housebuilder’s dividend yield is among the best in the sector (Times) 453.25p |
| Dalata Hotel Group | The hotel owner is benefiting from a resurgent Irish economy (IC) 360p |
| Greencore | An ambitious acquisition in the US is promising for the food group (Times) 319.75p |
| Haydale Graphene Ind. | This graphene small-cap could commercialise its technology soon (Shares) 186.5p |
| LVMH | The owner of Louis Vuitton is more diversified than rival Burberry (IC) €162 |
| Manx Telecom | The Isle of Man’s top telecoms provider offers a reliable income (Telegraph) 213.5p |
| Mariana Resources | The gold miner’s exploration in Turkey has revealed very high-grade ores (IC) 69p |
| Novo Nordisk | The insulin maker is a quality business with a good dividend (Telegraph) Dkr231.6 |
| Prudential | The Pru is growing and is a reliable provider of income (Times) 1,520.5p |
| Vodafone | Better-than-expected results will support the dividend (Shares) 204.25p |
IPO watch
Snap, the parent company of Snapchat, the popular mobile-phone picture-messaging service, has filed confidentially for an initial public offering (IPO) with the US Securities and Exchange Commission (SEC), reports Reuters. The firm could go public in March and is expecting to float at a price valuing it at between $20bn and $25bn.
That would make Snap the biggest IPO since Alibaba’s $170.9bn flotation two years ago, and the biggest IPO of a US tech firm since Facebook’s $81.2bn listing in 2012. Snap raised $1.8bn in venture capital (VC) funding in May, valuing it at almost $20bn. Its IPO will be closely watched by investors to see if the high valuations placed on hot tech firms such as Snap, Uber and Airbnb in VC deals will stand up in public markets.
A Swiss view
Sonova is about to move up a gear, according to Switzerland’s Finanz und Wirtschaft. One of the world’s top producers of hearing aids and hearing systems such as cochlear implants, the group reported a 6.7% increase in sales to Sfr1.1bn for the half-year to October. Net earnings fell marginally to Sfr152m, thanks to costs incurred by the takeover of Dutch hearing aid maker AudioNova.
But the deal will cement the group’s strong position in Europe, and it should benefit from economies of scale. Sonova has also just launched a batch of new products. From next year it plans to sell hearing aids containing a chip allowing them to connect to devices such as televisions and radios, regardless of the equipment’s manufacturer. The stock is worth a look.