MoneyWeek’s comprehensive guide to the week’s share tips from the rest of the financial press.
Three to buy
Phillips 66
The Daily Telegraph
This American giant was created four years ago when ConocoPhillips demerged its refining and marketing business. Specialist refiners like Phillips 66 are less sensitive than oil producers to changes in the oil price, and industry consolidation has been good for profit margins. If you buy “you will be in good company” – Warren Buffett recently increased his stake. $81
Spire Healthcare
The Mail on Sunday
Spire runs the second-largest chain of private health facilities in the UK. Half its business comes from medical insurance clients and 30% from the NHS. As the population ages and the NHS funding gap leads to more private operations, Spire will be able to tap into the over-50s market. It is now investing to meet the demand, spending £175m on new facilities, including 20 new operating theatres. 379p
Royal Dutch Shell
The Sunday Times
Shell has done well lately, even though the crude-oil price is stuck around $52 per barrel and the gas price is in a “rut”. It’s still “showering” shareholders with dividends, borrowing to keep doing so while it waits for an oil-price bounce. Buy for the yield, which is now 6% – but be aware that it might not last. 2,084p
Three to sell
Mitie
The Times
Shares in the outsourcing firm look cheap on less than ten times earnings, and it has just won a big security contract. But they are still best avoided. The healthcare side is losing about £4m a year, a write-down looks on the cards, and a share buyback may be suspended. Outsourcers are suffering from the uncertain economic environment. Expect further bad news.
199p
Cambian Group
Investors Chronicle
The care-homes provider used debt-funded acquisitions to grow in the past, but it failed to control costs and its balance sheet is now in poor health: in June net debt was equivalent to six times cash profits. Since announcing a plan to sell the adult services division the share price has risen, but public spending cuts will mean a “long hard slog to recovery”. Sell.
119p
WANdisco
Shares
Shares in the struggling big-data firm rose on news that CEO David Richards would be leaving, only for him to be reappointed days later, sparking a boardroom revolt. The company is picking up new work in Europe and America, but revenue has flatlined and it has been burning cash. With management seemingly at odds, investors should steer clear. 176.5p
And the rest
| Buys | |
| Babcock International | The outsourcer has a solid pipeline of work and a good track record of organic growth (Investors Chronicle) 997.5p |
| Burberry | News that industry veteran Marco Gobbetti will take over as chief executive has boosted the shares (IC) 1,526p |
| Centamin | The gold miner has just published record production figures and is highly cash-generative (Shares) 153.5p |
| Egdon Resources | Egdon should benefit as the government begins to sanction new fracking projects (Shares) 14.75p |
| Headlam Group | The carpet and floor-covering group has a strong balance sheet and high-yielding shares (IC) 493p |
| Interserve | The bad news at the support services firm should be behind it and the shares yield more than 7% (Times) 350.5p |
| Lloyds Banking Group | Lloyds’ mooted acquisition of the UK business of credit-card giant MBNA would be a good deal (Times) 53p |
| Marston’s | There is nothing in the pub group’s trading statement to justify its recent share-price slide (Times) 139.25p |
| Mondi | Shares in the paper-maker look like good value on 12 times earnings (Times) 1,598p |
| NWF | The agricultural feedstock supplier should be helped by stabilising milk prices (Shares) 156p |
| RPC | Shares in the plastic-packaging firm have doubled in the last two years, but have further to go (Shares) 992p |
| SSP | SSP operates food outlets such as Upper Crust, which take advantage of a captive audience at transport hubs (Shares) 323p |
| Stobart | Forthcoming results should underline the logistics outfit’s earnings growth potential (Shares) 168p |
| Volution Group | The ventilation-products firm should deliver long-term growth – a buy for patient investors (Times) 172.5p |
A German view
Swiss industrial group Georg Fischer has a presence in 32 countries and a finger in several promising pies. Its core business is metal and plastic piping systems, which benefits from the global push to improve infrastructure and the building boom in rich countries. It is also profiting from the trend towards hybrid and electric vehicles, as it produces lightweight components such as aluminium battery cases.
Another key division is precision machinery, which includes equipment to manipulate implants, giving it a foothold in the medical technology market. Total orders rose by 5% in the first half of 2016. Wirtschaftswoche thinks the group could grow its bottom line by 14% this year, and the shares could prove a rewarding long-term investment. They currently yield 2% and trade on a price/earnings ratio of 16.5.