Expert share tips this week

Here’s your round up of how the experts view key stocks this week.

Merlin, WH Smith and Royal Mail are among the companies under the spotlight this week.

1. Merlin Entertainments – BUY

Symbol: MERL.L

Index: FTSE 250

Merlin share price (Image: Google)

ValueAct, Merlin’s 9% activist shareholder, has made public a letter to the Chairman of Merlin proposing that the group be taken private.

Ivor Jones, an analyst at Peel Hunt, believes the group is undervalued and close to when the recently increased capex investment and efficiency investments begin to pay off.

“For the long-term investor, the current share price is an excellent entry point and we reiterate our Buy rating and 450p target price,” he said.

2. Royal Mail – HOLD

Symbol: RMG.L

Index: FTSE 250

Royal Mail share price (Image: Google)

Royal Mail delivered better than expected full year results today, but a new long-term £1.8 billion investment plan means future dividends will be cut significantly.

While full-year dividends rose to 25p this year, they are expected to drop to 15p in future years, according to Ian Forrest, investment research analyst at The Share Centre.

“The cut in the dividend is clearly a negative so the shares are no better than a hold,” he said

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3. Polypipe – ADD

Symbol: PLP.L

Index: FTSE 250

Polypipe share price (Image: Google)

Polypipe, the manufacturer of plumbing products, has posted 8% revenue growth in the first four months of the year and is on track to meet expectations.

Its trading was helped by robust end markets, acquisitions, improved weather conditions, and price increases, according to Gavin Jago, an analyst at Peel Hunt.

“The group remains very well placed to continue growing ahead of the wider UK construction market, given its leading positions in water and climate management solutions,” he said.

4. WH Smith – BUY

Symbol: SMWH.L

Index: FTSE 250

WHSmith share price (Image: Google)

The retailer, which has delivered a strong trading statement, will see its popular chief executive,

Stephen Clarke, who is stepping down for personal reasons.

However, his replacement, Carl Cowling, is also highly regarded in the City, according to Jonathan Pritchard, an analyst at Peel Hunt.

“We continue to rate WH Smith as one of our top picks, and any CEO-related weakness should be classed as a chance to invest in a fast-growing international retailer,” he said.

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5. Marks & Spencer – SELL

Symbol: MKS.L

Index: FTSE 100

M&S share price (Image: Google)

The retailer reported full-year results that underlined the challenging conditions, with clothing sales falling 3.6% and food down 0.6%.

Ian Forrest, investment research analyst at The Share Centre, said the market wasn’t impressed by the figures and the shares dropped 4% in early trading.

“The fact that sales are still expected to drop this year suggests the turnaround is still some way off,” he said.

 

 

The information included in this article does not constitute regulated financial advice. You should seek out independent, professional financial advice before making an investment decision.

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