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Sunday share tips: Homeserve, Unilever

Sun 14 June 2020 19:30 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Shares of Homeserve should "continue to do well", the Mail on Sunday's Midas column said, pointing to the company's growth outlook, plans for international expansion and - above all - the drive of its founder and chief executive as the main reasons behind its confidence in the outfit.

Covid-19 did impact the business, but the group had carried out no redundancies or furloughs and had taken no government handouts.

Furthermore, over the year ending on 31 March, its sales jumped by 10% and its underlying profits by 12%, with the latter reaching £181m, and Harpin was "particularly excited" about prospects for continued growth in America, which already accounted over half of the group's 8.3m customers.

There were also plans to expand into Japan and talks aimed at entering other markets were also ongoing.

Homeserve was also rolling out new processes and technologies to automate and improve its main operations, putting worried homeowners in contact with the nearest, and thus least expensive, engineer.

Its online Checkatrade platform that allows homeowners to search for tradespeople was also doing well.

Then there was its boss, Richard Harpin, whom the tipster described as "more enthusiastic than ever about Homeserve's prospects and determined to play a role in the its continuing success."

"Midas recommended Homeserve in 2016 when the shares were £5.96. Today, they are £12.30 and shareholders have received regular dividends too. Cautious investors may want to reduce their holdings and bank some profit, but they should not sell out completely.

"Harpin remains highly ambitious and, with a 12 per cent stake in the business, he is certainly motivated to succeed. The stock should continue to do well."

Jill Treanor recommended investors 'hold' stock of Unilever, highlighting that its dividend payout was safe despite warnings from some analysts that its second quarter results were due to show a reverse.

Writing in the Sunday Times's 'Inside the City' column, Treanor also noted the recent speculation and uncertainty around what the company's proposal to become solely a London-based operations.

For UBS, said Treanor, the end of the Brexit transition period in December was the motivation behind management's decision to unify its Anglo-Dutch structure under a UK listing.

Barclays's Warren Ackerman on the other hand pointed out the increased possibility that either a demerger or a big acquisition might follow such a move, although the analyst favoured the former.

"It's about optionality. It doesn't mean something is going to happen tomorrow," Barclays reportedly said.

"In the meantime, analysts will not be distracted from the sales line after Unilever's struggles to achieve its ambition for growth of between 3% and 5%.

"Ackerman, who noted that Unilever trades at a discount to European peers, warned that the second-quarter results - due on July 23 - would show a reverse.

"Although those numbers may be weak, the dividend should be safe for now. With the shares at £43, hold."

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