The major news at an individual stock level happened on the other side of the Atlantic this week – more than $30bn was wiped off Apple’s share price on Wednesday, while Amazon spiked 18 per cent today after recording a surprise profit.
However, there was still plenty to mull over for shares listed in the UK, as can be seen in this week’s roundup of share tips from low-cost trading platform Trustnet Direct.
Tuesday
Wincanton – Buy
On Tuesday, Questor tipped Wincanton, the UK’s largest listed haulage firm. Wincanton has just signed a contract with BAE Systems to manage warehouses of parts, ensuring these are in the right place at the right time to allow clients to build warships and fighter planes. Although the firm’s recovery continues to gather pace, shares retain an attractive valuation, trading on a P/E of nine times. It’s not all good news however: its Pullman vehicle repair business is struggling and the pension deficit is growing, but with shares up 40 per cent since Questor tipped the stock in July 2014, the column’s “buy” recommendation may have some merit.
Performance of stock since July 2014
Source: FE Analytics
British Land – Buy
Tempus tipped British Land as a decent bet for the long term, pointing out the London property boom looks unstoppable. The company claims London has one-third less available office space than would be expected, which bodes well for its recent developments and upcoming projects. More importantly, the company’s NAV is 829p per share while the current price is 847p. This is an incredibly small premium and although a downturn could rock the boat, there is more slack in this valuation than you might find elsewhere.
Wednesday
Royal Mail – Hold
Questor said investors should hang on to Royal Mail. The postal service operator’s interim update on Tuesday indicated it has started the year well and although letter volumes are still falling, headway is being made in terms of parcels. However, it is the second half of the year – including the lucrative Christmas period – that will have the real potential to deliver for the company. One possible cloud on the horizon is the matter of a regulatory investigation, although this appears to be priced in. The valuation benefits from a £1bn prime real estate portfolio in central London, while the prospective dividend yield of 4.3 per cent also adds to the appeal.
SSP – Sell
Tempus recommended taking profits from SSP, a year after the operator of food and drink outlets at airports and train stations was floated on the market. The shares are trading at approximately 50 per cent above the IPO price, with the high multiple – 22 times earnings – justified by the scope to expand into uncharted territories and the ability to improve margins. Currency movements are hindering progress, with 60 per cent of the business conducted outside the UK, so the column recommends that anyone who has been in since day-one should take profits.
Thursday
Marston’s – Buy
Tempus tipped Marston’s as a long-term buy yesterday, with the pub group completing a four-year programme to transform the shape of the business by disposing of approximately 500 properties. It is now focusing on increasing food sales at the upper end of its estate, through brands such as Pitcher & Piano, and it is opening around 25 new properties each year to take advantage of opportunities where the market is underserved. Shares currently trade on 13 times earnings and yield 4.4 per cent, with performance expected to improve as the reformed estate starts to deliver.
Friday
Howden Joinery – Hold
Earlier this morning, Questor said investors should hang on to Howden Joinery. The kitchen specialist has been boosted by the performance of the UK housing market, but Thursday’s results highlighted rising costs, taking 8 per cent off the share price. Although the company is growing and it plans to expand overseas, it is trading at 20 times earnings and is heavily reliant on the boom in UK housing continuing. With interest rates rising, now is not the time to buy.
Relx – Buy
Tempus recommended investors buy Relx – better known under its previous name of Reed Elsevier. The business-to-business publisher is not as well-known as its sector peers and given it is in the business of producing technical manuals and periodicals for academics, it is regarded as predictable, if boring. That is no bad thing for an investment, even if the shares trade at an 18 times multiple, making them appear expensive. However, the reliability makes this stock worth a look, even at this price.