We round up the Sunday newspaper share tips. This week, Midas tips self-storage company Warehouse REIT and updates on Lok’nstore, The Sunday Times looks at medicines distribution firm Clinigen, and The Sunday Telegraph assesses the prospects of Mitie.
MAIL ON SUNDAY
Chancellor Philip Hammond may be making a brave effort to save Britain’s high streets but consumer habits are not on his side, writes Joanne Hart.
According to recent forecasts, online shopping will account for 32 per cent of retail sales within the next five years, compared with around 16 per cent today.
Firms that distribute online need space to make, store and distribute their goods. Warehouse REIT provides that space. The shares are 96.5p and are likely to rise over the next five years and beyond, accompanied by generous dividend payments.
Warehouse REIT specialises in urban warehouses, located close to city centres and generally split into a number of units. Tenants include hundreds of small, up-and-coming e-commerce firms, as well as major retailers such as Boots, Asda and indeed Amazon.
Warehouse has 92 sites in total and more than 850 tenants. The properties are dotted round the country and most are little larger than a football pitch. These estates are nothing like the huge out-of-town distribution centres – three or four storeys high and the size of ten pitches – used by retail giants to store, stack and process online goods.
Instead, Warehouse REIT’s sites are primarily used to transport goods directly to consumers – known in the trade as last-mile delivery. This is a fast-growing sector of the market, as online shoppers increasingly expect their parcels to be delivered within 24 hours of purchase.
A dividend of 6p is forecast for the year to March 31, so the shares are yielding 6.25 per cent and the payout is expected to rise steadily over the next few years.
Philip Hammond used last week’s Budget to announce a boost for small retailers
AIM-listed Clinigen specialises in supplying drugs to patients who cannot get access to them through normal channels, says Sarah Meddings in The Sunday Times Inside the City column.
Acting as a middleman, it can send a medicine that has been approved for use somewhere in the world to somewhere it has yet to get the green light — and add a mark-up for its trouble.
Demand for its services is set to surge in the next decade as patients, often in emerging markets, become more aware of the availability of life-saving treatments in different parts of the world and demand their doctor supplies them.
Since it listed on AIM in 2012, it has bought rival Idis in 2015 for £225million and Link Healthcare in the same year for £100million. In recent weeks, it returned to the acquisition trail, agreeing in September to buy CSM, a European specialist in packaging, labelling, warehousing and distribution. A second smaller deal to buy iQone, which specialises in oncology, for €7.5million (£6.6million), brought with it scientific expertise.
With increasing fears that a no-deal Brexit could cause chaos among medicine makers, Clinigen has been extremely smart. Shares have been volatile since the CSM deal was announced on September 26, falling 11.1 per cent the first day to 830p.
However, they have recovered to 902.5p, valuing the company at £1.2billion. And at 13 times expected full-year earnings, Clinigen is viewed as undervalued by analysts.
THE SUNDAY TELEGRAPH
Mitie needs more than a quick wash and brush-up but the shares are worth a punt, James Ashton says in The Sunday Telegraph’s Questor column.
Outsourcing firms have taken a hit following the crisis at Carillion and Mitie is not alone in its struggle to persuade the City that there’s value in the business model.
Among many other services, Mitie served up beer during Wimbledon fortnight this year
Mitie hasn’t had a great year with its stock crashing by 26.3 per cent since full-year figures in June. Chief executive Phil Bentley needs to apply ‘a bit more elbow grease’ to get things back on track, warns Ashton.
However, in a recent note entitled ‘Coming round the U-bend’ analysts at Barclays pointed out that in the second half cost savings will finally exceed the investment that is going into the business.
It is a meaningful development, says Ashton, who also notes that the loosening of the public sector purse strings last week by Philip Hammond may also prove helpful.
Verdict: Risky buy
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