Hargreaves Lansdown

Sunday share tips: Severn Trent, Assura, Hotel Chocolat

Sun 11 December 2016 15:50 | A A A

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(ShareCast News) - Severn Trent shares are a 'buy' for the Sunday Times' Inside the City column. Not only are the water company's stock paying a 3.7% dividend yield, but infrastructure investors have been hunting for value in the sector in recent years. For example, National Grid's sale of a majority stake in its gas infrastructure business for more than a 50% premium over its value.

Such thinking has seen Severn Trent driven up to September's all-time high just above £25, some way above the £22 offer the company rejected in 2013. But in just over two months Severn Trent has seen its market value leak by 17% in on what the columnist said were fears about an imminent Bank of England rate rise making its debt payments more costly. That makes it one to watch.

Shares in Assura PLC are worth holding, said Questor in the Sunday Telegraph. The property developer, which raised £300m from investors this year, specialises in doctors' surgeries and walk-in centres, generally leasing them to the National Health Service on an average lease of at least 13 years. The ageing UK population provides growing long-term demand, while many NHS GPs are looking to move surgeries to more up-to-date buildings and more and more looking to rent rather than own.

While Assura argues that the NHS's shortage of local GPs that is shifting more strain onto already stretched hospitals, the current government policy is hardly funnelling much funding, leaving many NHS trusts to delay using what resources they have on property spending. Shares in the FTSE 250 group, which is being led by finance director Jonathan Murphy as it searches for a full time chief executive to take over after Graham Roberts stood down in the summer, have been unspectacular performers this year but yield 3.8%.

Hotel Chocolat was a 'long-term buy' for Midas in the Mail on Sunday. The St Lucia cocoa estate owner, manufacturer and retailer, which has also begun to open cafes, served up some mouth-watering profits growth in the year to June and is expected to grow sales by nearly a quarter and profits by at least a third in the current year. Since the company listed on AIM in May at just under 150p and had almost doubled in October before beating nibbled down to 260p at the end of last week.

Most of profits are for the present being invested in growth but management plan to pay a dividend from 2018. The business should be fairly resistant to economic fluctuations as the chocolate price range goes from £1 to £165, or £100-300 for varieties of chocolate-based hampers. Growth plans are focused on the UK for now, but there is already one store overseas, in Copenhagen and a boutique hotel near the St Lucia plantation, with a gradual expansion abroad to be led by the online offer.

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