MoneyWeek’s comprehensive guide to this week’s share tips
Six to buy Conduit Holdings
The Mail on Sunday
More frequent natural disasters and geopolitical turmoil have reminded insurance companies that they also need insurance. That’s driving demand for the speciality reinsurance work done by this firm, which says that premiums are rising by as much as 60%. The “highly specialised” nature of reinsurance keeps a lid on competition. The firm listed in December 2020 and boasts “well-placed contacts... smart underwriters and plenty of experience”. The shares should yield an attractive 6.5%, making this a good pick for income seekers. 450p
Hilton Foods
Shares
Shares in this global meat- and fish-packing business were shaken by two profit warnings last year, but a recovery may finally be under way. The company, which processes and packages food for major retailers across Europe, AsiaPacific and North America, was caught up in a “perfect storm” of cost inflation and consumer weakness in 2022. But a more “soothing” year-end statement shows that this remains an excellent business poised to return to sustained growth. On 12.3 times forecast 2023 earnings and yielding 4.1%, the shares are “just too cheap at these levels”. 674p
JD Sports Fashion
The Times
Management at this athleisure group has ambitious plans to spend up to £3bn over the next five years on expansion across the US and Europe. The firm wants to open 1,750 new shops, while raising investment in the digital and logistics operations. The business already controls about a quarter of the UK athleisure market and intends to grab a bigger slice of an international market that is experiencing strong structural growth: athleisure sales grew at an annual rate of 6% between 2017 and last year. Previous smaller moves into the US have been a success and these plans could now “substantially boost profitability and cash generation”. 180.75p
Land Securities
The Telegraph
Times are hard in Britain’s commercial property market, but falling asset values also present an opportunity for this real estate investment trust. Flush with the proceeds of the sale of some of its prime London office space, the firm is in a strong enough financial position to go shopping for discounts in higher-yielding urban-mixeduse developments. A substantial discount to net asset value makes it a buy. 719.25p
Renishaw
Investors’ Chronicle
The turn in the semiconductor cycle is bad news for this supplier of precision manufacturing equipment, but the adverse effect is being offset by growing demand for the group’s expertise in 3D-printing (known as “additive manufacturing”). The technology is increasingly popular across the electronic, healthcare, aerospace and defence sectors. Governments are launching a subsidy bonanza, so demand for semiconductor equipment will begin to pick up again. The shares aren’t cheap, but given the long-term growth outlook the price is fair. 3,900p
Ricardo
The Sunday Times
This engineering consultancy has grown from its roots in the car industry into green tech, with the latter now accounting for almost two-thirds of its revenues. Environmental work includes contracts to develop the UK’s air-quality emissions modelling tool and to work on hydrogen-electric planes with Pratt & Whitney Canada. Some investors are concerned about ongoing exposure to internal combustion engines, but there will be a “long tail” of such work before electric vehicles take over fully. The shares are still well short of the £8 pre-pandemic price, but there should be upside to come as it transitions to a “greener future”. 550p