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Sunday share tips: Spectral MD, Young & Co's Brewery

Sun 16 April 2023 22:49 | A A A

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(Sharecast News) - The Financial Mail on Sunday's Midas column recommended that readers stick with their shares in Spectral MD and wait and see if the proposed takeover succeeds.

During the previous week, Spectral proposed a £135m takeover by shell company, Rosecliff Acquisition, which would then delist the business from AIM and list on the US Nasdaq.

Investors were expected to receive one new share, worth $10 each, for every eight that they currently held, valuing Spectral's shares at approximately £1 each.

Yet the share price had not surged towards the takeover price, although they had gained sharply, reaching 64p at one point.

Some investors were perplexed by the proposed deal whilst others were skeptical and some had chosen to take profits now, Midas explained.

"Investors who bought at 31p last month should sit tight and await developments. There is even a case for buying a few shares now.

"Whatever happens, investors can easily sell out before the US move completes, or stick with the stock once it moves to Nasdaq."

The Sunday Times's Lucy Tobin spied plenty of long-term opportunities at Young & Co's Brewery, telling readers to stomach the short-term volatility and 'buy'.

The quality of its pub estate and that its energy costs, as well as its beer, wine and spirits contracts had been hedged until March 2024 had allowed the company to hike its dividend while reducing its leverage over the half ending on 26 September.

It had also posted a nearly 25% jump in its like-for-like sales and were 6.2% higher than over the same stretch pre-Covid in 2019, while pre-tax profit had jumped by 15%.

That performance however had not been reflected in the share price with the shares trading at 17 times' the company's estimated 2023 earnings, which was well below their pre-Covid multiple.

She also pointed to the business's strong balance sheet and upcoming Rugby World Cup and coronation bank holiday which would bolster sales.

"Mark Irvine-Fortescue, an analyst at Stifel, describes Young's as "the pub industry gold standard: a premium 'defensive' stock but with a record of, and appetite for, growth and value creation".

"Stomach short-term volatility and there should be plenty of long-term opportunity. Buy."

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