MoneyWeek’s comprehensive guide to this week’s share tips
Six to buy
Empiric Student Property
Shares
While the wider property market wobbles, student accommodation remains one area with positive dynamics. Empiric’s shares trade on a 19.3% discount to 2023 forecast net asset value (NAV), much cheaper than the 3.1% premium at peer Unite. Empiric has a patchier record than its bigger rival but its move towards “clustering” – developing new accommodation near existing sites to harness economies of scale from building management and other services – shows promise. The group is also moving into the untapped postgraduate market. 91p
Ferguson
Barron’s
America’s biggest distributor of plumbing and HVAC (heating, ventilation and airconditioning) kit moved its primary listing from London to New York as it refocused on its North American business. On a modest 14 times forecast 2023 earnings the shares still trade at a UK-style discount to US peers, but that gap could close. The firm’s size may see it eventually join the S&P, which would trigger huge automatic investment inflows from tracker funds. Add in ample scope for consolidation in the sector and don’t let anyone tell you that “leaky faucets and malfunctioning air conditioners can’t be exciting”. $126
Intelligent Ultrasound
The Mail on Sunday
This Cardiff University spin-off works on technology that makes medical scanning faster and safer. The company has developed products that use artificial intelligence (AI) to help clinicians carry out obstetric and local-anaesthetic procedures. The firm’s technology has already “been snapped up by dozens of hospitals” as well as US giant GE Healthcare. The firm is a “minnow” for now and still loss-making but it should make money “over the next two years”. This is a chance to get on board early. 7p
Intertek
The Telegraph
Performance at this assurance, inspection, product testing and certification business is closely linked to the performance of the global economy. The shares have thus disappointed ever since the arrival of the pandemic, but the firm has stayed “highly profitable” and, over the past five years, has averaged an impressive 31% return on equity. The reopening of China, the source of 19% of total revenues, should provide a welcome fillip in the year ahead. On a price/earnings (p/e) ratio of 19.2 the shares aren’t cheap, but “upbeat growth prospects and sound fundamentals mean it is worthy of its premium valuation”. 4,044p
Lam Research
Investors’ Chronicle
This US wafer-fabrication specialist is one of the firms whose complex inputs help produce the computer chips that go into smartphones and computers. Demand for electronics is sagging amid a post-pandemic slump, but on a forward p/e of 17 the shares trade on a big discount to the sector. That partly reflects greater exposure to cyclical demand for memory chips. Still, Lam remains “highly profitable” and billions in US subsidies will more than offset the loss of China’s market amid geopolitical wrangling. A cheap chip recovery play. $507
Young & Co’s Brewery
The Sunday Times
This upmarket chain of 223 managed pubs has withstood Covid-19, inflation and the costof-living squeeze better than most. Like-for-like sales rose by almost
25% in the six months to 26 September, while pre-tax profit climbed by 15%, an impressive performance given the meltdown elsewhere in the sector. A strong balance sheet is even allowing the firm to snap up a few pubs on the cheap. The share price is well below its pre-pandemic level of £16, but the coronation and Rugby World Cup should be good for business, so drink up the shares. 1,160p