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Weekly Shares Tips

In association with Shares Magazine.


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22 June 2017

To help you maximise investment opportunities, we have teamed up with Shares Magazine to provide you with timely insight into current market trends.

Below you will find their top tips and the week's Best and Worst Performers.


Important information

This webpage contains information supplied by Shares Magazine that is intended for general information only and therefore specific needs, investment objectives, risk appetite or financial situation of any person have not been taken into consideration. It does not constitute advice or an invitation to invest.

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested.

Past performance is not a guide to future performance.

Marlowe

Gain to date: 30.6%
Original entry point: Buy at 310p, 23 March 2017

Daniel Coatsworth

A 30%+ SHARE PRICE gain in three months is a great start for our trade on support services group Marlowe (MRL:AIM). We think there is much more to come from the fire and water services expert, particularly as it has just made an interesting acquisition and imminent full year results could remind the market of its achievements and future potential.

As a reminder, Marlowe is buying small businesses that serve heavily-regulated markets. Its activities include checking fire detection and fire alarm systems, as well as making sure hotels and offices have clean water. It had £2.7m net cash as of 31 March 2017. A month later Marlowe increased it debt facility by £5m to £17.5m, giving it greater firepower to make acquisitions.

On 16 June it paid £1.9m for Advance Environmental which provides water treatment and hygiene services to sectors including healthcare, education and leisure.

Full year results are expected to be published at the end of June. We expect an update from the company on how it is managing to increase operating margins across its acquired businesses.



Shares says:
"Keep buying at 405p."
Buy Marlowe

Huge IQE upside if Apple talk is true

Laser technology rumoured to feature in latest iPhone

Steven Frazer

There is emerging speculation that technology designed by compound wafer company IQE (IQE:AIM) could feature in the new Apple smartphone, the iPhone 8. If true, this could have substantial earnings implications for the company, and possibly see the share price more than double from current 87.25p levels to 185p, according to broker Peel Hunt.

Cardiff-based IQE designs advanced semiconductor wafers used in many emerging applications, from infrared sensing to laser-based photonics. Rumours imply that the iPhone 8, expected to launch sometime in the autumn, will feature 3D sensing and gesture recognition functionality based on vertical cavity surface-emitting laser technology (VCSEL), in which IQE is believed to be a world leader.

If proven and ‘the upcoming iPhone launch is successful, it is also highly likely that we would upgrade our forecasts substantially,’ states Andrew Shepherd-Barron, an analyst at Peel Hunt.

In 2016 Apple sold 211.9m iPhones and it has shifted another 129.1m handsets year-to-date, according to data supplied by Statista.

Having worked through several scenarios, Shepherd-Barron believes his year to 31 December 2018 earnings per share (EPS) estimate of 3.4p could soar as high as 15.4p on a best case basis. His mid-point forecast is 6.2p, on which the 2018 price to earnings (PE) multiple would stand at 14.1, or 16.1-times based on the analyst’s 100p target price.



Shares says:
"At the time of writing IQE was unable to confirm or deny the speculation."
buy IQE

The small cap whose share price could rise 75%

Shares in showers and taps specialist Norcros are cheap and offer an attractive dividend yield

Tom Sieber

Shares in bathroom fit-out specialist Norcros (NXR) look cheap despite the company delivering an eighth consecutive year of revenue growth in the 12 months to 31 March 2017.

At 173p, the shares trade on 6.1 times stockbroker Numis’ forecast earnings per share (EPS) of 28.5p for the year to March 2018. They also offer a prospective yield of 4.5%. The expected dividend payment is covered just over 3.6 times by forecast EPS, which is a very healthy ratio.

The discounted valuation suggests the market believes earnings forecasts cannot be achieved in the current macro-economic environment as well as concern about pension liabilities.

Chief executive Nick Kelsall tells Shares managing the pension liability, which fell from £97.8m to £62.7m in the second half of the latest financial year, does not impede day-to-day running of the business.

He is reassuring about management’s ability to achieve growth even in uncertain times as the company tries to increase market share.

Norcros’ best-known brand is probably the Triton range of showers. It is focused on the UK and South Africa. The South African operation, which Kelsall says was once a ‘problem child’ for the group, delivered 8% revenue growth at constant currency in the year to 31 March 2017.



Shares says:
"The stock is attractively valued. Numis has a price target of 300p, implying nearly 75% upside for investors over the next year."
Buy NORCROS

Best and worst performers

Week change to: 21/06/2017

Source: SharePad



FTSE 350 best performers
% change
CLS Holdings
+10.0
Ocado
+9.5
Stobart
+7.8
Daejan Holdings
+7.3
Melrose Industries
+7.0
Acacia Mining
+6.8
Capita
+5.8
Coats
+5.4
UDG Healthcare
+5.4
Homeserve
+5.4

FTSE 350 worst performers
% change
Domino's Pizza
-8.8
Crest Nicholson
-9.1
Tesco
-9.3
Hunting
-9.3
Drax
-9.4
Evraz
-10.0
Cairn Energy
-10.0
KAZ Minerals
-12.0
Anglo American
-12.0
Tullow Oil
-12.0

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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.