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Sunday share tips: Marks and Spencer, Bloomsbury

Sun 20 December 2020 19:40 | A A A

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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) - The Sunday Times's Sam Chambers thinks investors should 'buy' stock in Marks&Spencer, arguing that the retailer is finally taking radical measures to turn around its fortunes.

Key among the latter was the firm's acquisition of a 50% stake in Ocado's online food unit which had seen sales surge by 35% last quarter.

Writing in his 'Inside the City' column, Chambers said: "Despite its drawbacks, the venture gives Norman a real growth story to sell for the first time in years.

"And with the shares having taken a battering, potential rewards outweigh the risks. Buy."

Chambers also cited recent backing for the firm from The Analyst, the well-regarded research shop in the City who urged clients earlier in December to buy the shares.

Then there was M&S's stated interest in acquiring Jaeger, Victoria's Secret, and parts of Arcadia Group, which Chamber said showed it was "finally accepting it cannot stop the rot without some bold action."

There was also the possibility that Marks&Spencer might sell the remainder of its international business to strengthen the balance sheet and perhaps even a chance that might revive plans to spin off its clothing business.

The Financial Mail on Sunday's Midas column recommended shares in the publisher of the Harry Potter saga, Bloomsbury, to its readers, predicting that the stock was headed higher.

Contrary to what Bloomsbury chief, Nigel Newton, had anticipated at the start of the pandemic, the company's sales did not fall off a cliff, nor did its profits.

Over the six months ending in September, the group's profits in fact leapt 60% higher to £4m.

That should have been no surprise given Britons' desire to entertain themselves through the strict lockdowns.

In parallel, over the first half of its financial year, revenues at Bloomsbury Digital Resources had jumped by 47%, stoked by demand from schools and universities around the world for online teaching.

Bloomsbury's dividend, which was reinstated in October, is expected to reach a total of 8.2p per share for the year ending in February, rising to 8.5p during the following year.

Before Covid-19, the firm had raised the dividend for 25 years straight.

"Some brokers believe profits will fall in the current year but analysts have often underestimated Bloomsbury in the past and, if current momentum continues, their predictions may prove overly pessimistic again. Either way, growth is expected to resume from 2022.

"Midas verdict: There is little to beat a good yarn and Bloomsbury seems particularly good at picking the best of them. At £2.79, the shares offer long-term potential and the dividend adds an extra kicker."

    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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