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Sunday share tips: JD Wetherspoon, Amigo Loans

Sun 24 November 2019 16:29 | A A A

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(Sharecast News) - The Sunday Telegraph's James Ashton said although pubco giant JD Wetherspoon's stock boasted the highest valuation in the sector, it still remained investors' "best bet" among boozers.

Pubs were previously expected to suffer following 2016's Brexit referendum as a result of soaring costs from business rates, as well as rising minimum wages and utilities.

However, as Ashton pointed out oil his Questor column, pubs' property assets and reliable cash flows had won them "a new generation of thirsty fans".

Ashton said chief among the beneficiaries was JD Wetherspoon, whose chairman, Tim Martin, had become better known as the number one Brexit-backing businessman than for the pub itself.

Questor noted that underlying sales rose 6.8% in 2018 as growth in food sales outpaced drink. Overall, Ashton expects growth in the current year to be slower - with a 5.3% rise in first-quarter underlying sales.

A further contributor to value, Ashton also noted Wetherspoon's foray into the hotel world, letting rooms over its pubs.

"The group still takes more money from slot machines than it does from overnight stays in its 1,200 rooms but it is getting noticed," he pointed out.

Ashton said: "Trading on 20.5 times this year's forecast earnings, the stock has yet to reflect what could be slower growth ahead.

"But if the froth is about to be blown off the resurgent pubs sector, Wetherspoon's is the best bar to put your money behind. Hold for now."

Emma Dunkley at the Sunday Times said subprime lender Amigo Loans could "do with some friends" after shares crashed from 275p to 60.2p.

In her Inside the City column, Dunkley said Amigo, which hands as much as £10,000 within 24 hours to borrowers with a guarantor at a typical rate of 49.9%,, had been through a "tough time" since listing with a market value of £1.3bn in June 2018.

Chief executive of the FTSE All-Share company Hamish Paton will announce the group's first-half results on Thursday. Goodbody analyst John Cronin expects a pre-tax operating profit of just £48m for the six months to the end of September - well and truly down from £58.3m recorded a year earlier.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

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