Steer clear of shares in Debenhams (DEB), Questor advised in the Sunday Telegraph. There was no repeat of the December 31st profit warning when the department store group published its trading statement on June 20th. Trading was in line with expectations. But Debenhams has damaged its brand by repeatedly cutting prices. Opening up stores to Sports Direct (SPD) concessions looks confused. Add in the company’s high debts and the shares are best avoided.
Johnston Press’s (JPR) prospects may not be as grim as its battered share price suggests, Danny Fortson said in his Inside the City column. The Sunday Times tipster said the regional newspaper publisher’s recent fundraising was backed by canny investors including Malaysian billionaire Ananda Krishnan and BSkyB (BSY). Johnston sales staff will sell Sky’s ad slots to local businesses. Chief Executive Ashley Highfield has a credible plan for the company in the digital age and Johnston is a “decent punt” for those with strong constitutions.
Hold shares of Carpetright (CPR), Danny Fortson said in the Sunday Times. In his Inside the City column, Fortson said the departure of founder Lord Harris, leaving Carpetright with newcomer Chief Executive Wilf Walsh, made it an unknown quantity. The shares have fallen as Carpetright has issued three profit warnings and its business in the Netherlands remains a problem. The revival in the UK property market has failed to feed through to Carpetright’s business as hoped. The shareholder register is highly concentrated with room for greater share price disruption if a big investor becomes disaffected.
Midas in the Mail on Sunday admitted its dividend surprises portfolio had taken a knock after six of the 10 shares fell since its last quarterly review in February. However, the rolling group of shares has outperformed the FTSE 350 index. The tipster urged investors to bear with the portfolio, which is designed for the long term. The 10 companies’ dividend payments were those that most exceeded broker forecasts, suggesting good things were in store. New additions are Xaar (XAR), the 3-D printing company; copper miner Antofagasta (ANTO); buyout group 3i (III); and Qinetiq (QQ.), the defence IT group. Premier Oil (PMO), Man Group (EMG), Bank of Georgia (BGEO) and Howden Joinery (HWDN) have left the portfolio. Berkeley Group (BKG), Northgate (NTG), Ashtead (AHT), easyJet (EZG), Drax (DRX) and 888 (888) have stayed in the portfolio.
Investors with a taste for risk should buy shares of AIM-listed wind-power company Greenko, Questor recommended in the Sunday Telegraph. The India-focused operator’s revenue rose 38 per cent and pretax profit jumped 70 per cent in the year ended March 31st as power-producing capacity at its wind farms more than doubled. India has serious power shortage problems and Greenko (GKO) has commissioned new capacity. The company is a high-risk speculative buy.
BUSINESS PRESS HEADLINES:
An oil-price spike driven by the worsening crisis in Iraq could derail Britain’s recovery, drive up government borrowing, put household finances back under pressure, and damage global growth. With Islamist fighters from Iraq and the Levant taking new ground on the border between Iraq and Syria on Saturday, oil analysts have warned that prices could rise by up to 30 per cent if the conflict escalates. An increase of that scale could knock half a percentage point off GDP growth and add more than a quarter point to inflation, according to the government’s own forecaster. – The Times
Russian President Vladimir Putin said the only way for Ukraine to bring an end to an insurgency in the east would be to open an unconditional dialogue with separatist leaders. While he reiterated his support for a recently declared cease-fire by Ukrainian government troops, Mr. Putin stopped short of saying that Russia would try to rein in the separatists it has been accused of arming. – The Wall Street Journal Europe
The boss of the Financial Conduct Authority has lashed out at banks for their ‘disappointing’ interpretation of new rules for mortgage lenders. Its Mortgage Market Review, which was designed to curb risky lending, forces banks to question customers’ spending habits before offering a loan. But the Mail revealed last week that some banks were preventing homeowners from switching to cheaper deals, citing the more stringent rules. – The Daily Mail
Britain's recovery has become entrenched and the Bank of England should start to raise interest rates in the coming months to reflect the stronger economy, according to one of its most dovish policymakers. David Miles, one of the nine members of the Bank’s Monetary Policy Committee (MPC) that sets interest rates, described the recovery as “resilient”, ”firm” and “sustainable”, and said it was increasingly likely he would vote to raise rates from a record low of 0.5 per cent before leaving the committee next May. Writing in The Telegraph, Mr Miles said increases which stemmed from firmer UK growth was “good news” for the economy. – The Daily Telegraph
An emergency £2bn bailout of the NHS is being demanded within the government amid high-level fears of an approaching crisis in patient care. Ministers have been given dire warnings about the consequences of a raid on hospital budgets next year. Experts are predicting longer waiting times and staff cuts as hospitals slide into the red without extra funds from the Treasury. – The Times
Morrisons (MRW) has opened up another front in the supermarket price wars by cutting the cost of 135 more products. The supermarket chain, which is under sustained pressure to halt its declining sales, announced a range of price cuts to woo back customers. Chief Executive Dalton Philips, who has faced criticism over the group's performance, insisted that the move would help slash household shopping bills. "These are permanent price cuts, not promotions, and they won't be the last," he said on Sunday. – The Guardian
