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Sunday share tips: Kingfisher, Glencore, Associated British Foods

Sun 18 November 2018 17:49 | A A A

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(Sharecast News) - A round-up of share tips from the Sunday newspapers, including Kingfisher in the Sunday Times, Glencore in the Mail on Sunday and the Sunday Telegraph taking a look at Associated British Foods.

Kingfisher was under the microscope in the Sunday Times' Inside the City column ahead of third-quarter sales this week that analysts expect to underwhelm, meaning investors should "stay on the sidelines for now". However, if boss Véronique Laury's big pledge to boost annual profits by £500m with a five-year transformation of the retailer fails, then the shares might offer an opportunity for buyers.

Close to three years into Laury's One Kingfisher plan, having with major tinkering to the supply chain, IT systems and costs, group profits at the B&Q and Screwfix owner are little moved, unlike the shrinking cash pile and management reshuffles. The Frenchwoman's strategy to sell more of the same products across its UK, French, Polish and other European businesses "is flawed", says one former inside source, not helped by Anglo-French tensions.

The UK is also "falling out of love with DIY", which has hurt B&Q but benefited the trade-focused Screwfix. Many investors have doubts about the £500m profit target by 2021 and some predict Laury will instead sell Screwfix, with a £2bn price tag being bandied. The group is, however, very profitable, owns £3.5bn of property and has no debt.

Shares in Glencore were tipped as a 'buy' by Midas in the Mail on Sunday, having fallen by almost a quarter in 2018 since hitting a five and a half year high in January. With Brexit uncertainty hitting UK-focused stocks, the Swiss-based commodities giant has virtually no exposure to the UK economy and metals prices are slowly recovering, while chief executive Ivan Glasenberg looks to turn things around. London's biggest ever flotation when it joined the market at 530p in 2011, becoming even bigger when it bought miner Xstrata, then tumbling to below £1 in late 2015 as China's growth slowed and investors worried about the effect on its huge demand for metals.

The fall in metals prices, particularly copper, Glencore's key metal, led to Glasenberg pursuing a cash call for not far off £7bn. With the balance sheet bolstered and metal prices recovering, Glencore shares have strengthened but still much weaker than their float price, though there are reports that Glasenberg wants to get the price back above where they started before retiring in three to five years' time. A bribery investigation by the US Department of Justice continues to weigh on the shares.

Another City rumour is that the South African, who along with other directors owns more than a quarter of the company, wants to take it private again. "If he did take that route, he would be forced to offer investors more than the market price for the shares."

Questor in the Sunday Telegraph gave a 'buy' tip for Associated British Foods, saying that the conglomerate's Primark retail arm will succeed where many other British businesses have floundered - the USA.

With its final results at the start of November, ABF said the US business had a good year, with its ninth store, in Brooklyn, trading very strongly and existing stores delivering like-for-like growth in the second half. Two further stores are planned, New Jersey in 2019 and Florida in 2020, with work underway to add further stores "in the medium term" to be serviced from the existing US warehouse in the east.

Primark's appetite to expand further on the other side of the Atlantic "has contributed to the shares in its parent company, Associated British Foods, bouncing back into fashion", said Questor.

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