The sun may be out, but it certainly isn’t shining on the FTSE with the index down 2 per cent, wiping out all the gains in what had, before today, been a positive week for markets.
Here Trustnet Direct rounds up the stock recommendations in the national newspapers over this time.
Tuesday
PureTech Health – Buy
Tempus kicked off this week’s roundup by recommending PureTech Health. This is a healthcare technology firm that works on a number of cutting edge, unproven projects. The column notes that it has 22 separate investments on the books at the moment and 15 of them are assigned no value – but the remaining eight are certainly attracting interest. A refinancing has brought in blue chip investors too and although the market may be out of love with these IP-based companies, this is suppressing the valuation. There could be some long-term potential here.
PZ Cussons – Sell
Questor said investors should sell PZ Cussons. Shares have had a good run off the back of rising oil prices for most of the year, with Nigeria being the company’s largest market and its economy is inextricably linked to the commodity’s fortunes. However, there’s now some uncertainty creeping in as consumers in the country find themselves squeezed and this could mean a big hit on revenues, leaving the column to think that now might be a good time to cut holdings back. Shares currently trade on a punchy multiple of 20 times and although it is tipped to fall to a 17 times multiple next year, this still looks expensive given flat revenues. Shares have been underperforming sector peers and some brands probably need to be sold off. With annual results due at the end of next month, now may well be a good time to jump ship.
Wednesday
Tullett Prebon – Buy
Tempus recommended buying Tullett Prebon. The competition authorities may have thrown a spanner in the works over the acquisition of parts of ICAP, but this is a pretty small speedbump taken in context and it shouldn’t derail the process. Even if it is forced to carve out the oil broking business – the bit that has attracted the criticism – it’s something like 3 per cent of group revenues, so shouldn’t stop the deal being completed before the end of the year. With shares off 11p, trading on just a 10 times multiple and offering a 5.4 per cent dividend yield, there’s certainly a lot to like about the stock.
Royal Dutch Shell – Hold
Hold Royal Dutch Shell, said Questor. Tuesday’s investor presentation appears to have allayed some fears over the repercussions of the BG Group acquisition, with the suggestion that the dividend – currently at a rather punchy 7.6 per cent – remains safe. The column notes that often deals like this don’t end up favouring shareholders, but the company is now busy hacking away at the combined entity in a bid to reduce costs. So long as disposals can be made promptly and there’s no sharp decline in oil prices, however, all seems reasonably healthy with the new enlarged company.
Thursday
Brighton Pier Group – Sell
Questor recommended that investors avoid Brighton Pier Group. This company owns the world-famous pier, plus a portfolio of bars, but the column isn’t too keen on investing, largely because of uncertainty over what will be found in the next underwater survey of the pier. This is carried out every six years and the next one is due this summer. With the pier delivering the bulk of the profits for the business, anything that means significant capex will have a detrimental effect. The company has potential, but these unknowns are seen as too much.
Workspace – Buy
Buy Workspace, said Tempus. The company provides office space to small, fast growth industries, but the shares have had a rough ride since the start of the year and are trading at a discount to net asset value. This seems an overly pessimistic view of the market, especially because the business has little exposure to financial services – the sector that is tipped to be among the hardest hit if we do vote to leave the EU.
Friday
JD Sports – Buy
Questor took a slightly different approach this morning, running through the companies set to be in favour from the impending summer of sport. Takeaway food providers and pub groups are both obvious picks. Bookmakers also make it onto the list, although with a word of warning – Paddy Power Betfair is currently trading on a racy 36 times earnings, while fortune seems to be stacked against William Hill at the moment after a profit warning and an unfortunate run with favourites romping home at Cheltenham. Perhaps the most timely is the sportswear retailers – Sports Direct is in the spotlight right now, but wage inflation is tipped to dent profitability here. Smaller peer JD Sports, however, could be the one to watch – profits soared 57 per cent last year and the column suggests it could have further to run.
Performance of stock over 1yr
Source: FE Analytics
RPC Group – Buy
Tempus said investors should buy RPC Group. The plastics producer has agreed to buy packaging specialist British Polythene Industries and the resulting synergies – especially in terms of bulk buying power – are seen as being set to deliver for investors. On top of this, with customers in this industry keen to buy from fewer suppliers, having a broader product suite – as delivered in this merger – should be positive for the combined entity. Even though RPC’s shares currently trade on a 16 times multiple, the company’s ability to find organic growth as well as make astute acquisitions means there’s still upside potential here.
