Wednesday
De La Rue – Hold
Tempus said investors should hang on to De La Rue. The numbers don’t look great for the money printer, with revenues and pre-tax profits both in decline for the first half of the year. Management is however trimming costs and the company is seen as a key contender for the new £20 polymer note, but critically it needs to expand into parallel services. For example, there’s a digital passport that could be embedded into smartphones from the company’s security and identity unit – this is where the real growth could be seen. Shares appear to be ticking higher after a protracted rout, but there is still work to be done by management.
Thursday
Segro – Buy
Questor said investors should buy Segro. The company changed tack back in November 2011 to become an income-focused REIT and this is delivering upside to the share price, but the growth of internet retailing, a strong pipeline for future developments and supportive plans from the government – both in terms of easier planning rules and levelling the playing field with offshore players in terms of tax – all bode well for the outlook. Even if yields for industrial space are lower than they were in the last economic cycle, the column said it likes the look of this stock.
Paragon – Buy
Tempus tipped Paragon, the specialist lender to the buy-to-let market. This may seem like a contrarian call with the Bank of England attempting to take some heat out of this sub-sector of the housing market, but the company has always been stringent in its lending criteria to a level that at least meets – if not exceeds – the checks being proposed by the Prudential Regulation Authority. Paragon has expanded its funding lines too, but with shares having sold off 50p over the last few months, the stock has the potential to look attractively priced.
Performance of stock over 1yr
Source: FE Analytics
Friday
Grainger – Buy
Questor recommended buying Grainger, the country’s biggest residential landlord. Individual buy-to-let investors have been hit by a 3 per cent surcharge on stamp duty, but companies such as Grainger can still make for attractive investment propositions. What’s more, downside pressures have pushed the stock to a 22 per cent discount to NAV while the company is putting its weight behind building new developments for the rental market. This is an astute move as the company benefits from the government’s build-to-rent initiatives. Shares in housebuilders may be running out of steam, but the column is rather more optimistic over this play.
AO World – Buy
Buy AO World, was the message from Tempus earlier this morning. This stock isn’t without risk, but the company has bold ambitions to be a disruptor in the white goods market. To keep growing, it needs an ever-wider customer base, so the company has started an assault on mainland Europe. The shares are still dogged by the IPO which advisers managed to rush through at what was later seen as an inflated valuation and although the stock remains volatile, this works both ways – yesterday’s better-than-expected Q4 numbers saw shares rally 3.6 per cent. Growth forecasts look promising and the column deems the stock cheap, even if getting to the end goal may be a hard slog.
