Three to sell

Hollywood Bowl

The Telegraph Shares in the UK’s largest tenpin bowling operator are trading on a forecast price/ earnings (p/e) ratio of 15 – a valuation that “fails to account for the company’s near-term challenges”. High inflation will affect consumers’ spending and is likely to decrease demand for non-essential services, which could “squeeze margins in future”. The “novelty of post-lockdown leisure activities” is also decreasing. Sell. 234p

Imperial Brands Investors’ Chronicle

Tobacco company Imperial Brands is grappling with increasing societal and regulatory challenges as well as tobacco’s declining appeal. The shares were hit at the end of April when the US Food and Drug Administration (FDA) announced proposals to ban menthol cigarettes and flavoured cigars, which could stifle growth opportunities in a growing market. The company is also currently appealing against FDA marketing denial orders for some of its vaping products. While heated tobacco sales have outperformed traditional tobacco, they only account for 3% of the company’s tobacco revenues. Sell. 1,789p

Vodafone The Times

Reports that this telecoms firm is in talks with rival Three have grabbed attention from investors, but there are both competition and commercial hurdles to a deal. Growth has been slow and investors are not convinced it will consistently improve. A “bungled response” to regulatory change in Germany has yet to be resolved and could drag revenue down next year. The fragmented telecoms sector in Europe has hindered Vodafone’s ability to make a decent return, held back by the higher cost of running the network for a smaller customer base. Avoid. 125.9p