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Sunday share tips: Severn Trent, Ladbrokes, Lloyds Banking

Sun, 27th Apr 2014 08:35

Severn Trent investors have reasons to be annoyed after the water company's performance since rejecting a takeover bid, Danny Fortson argued in the Sunday Times. In his Inside the City column, Fortson said Severn's shares are almost a fifth lower than the 22 pounds offered by overseas investors a year ago. New Chief Executive Liv Garfield has a difficult job because the industry regulator has said price rises will be limited. With Deutsche Bank predicting falling profits and a small dividend cut next year, some investors may not be in the mood to celebrate.Bet on Ladbrokes' shares but only if you have the stomach, Danny Fortson advised in the Sunday Times. The bookmaker's shares have fallen 35% since August, in large part due to tax rises on gaming terminals and an expected curb on roulette machines. The crackdown could be less severe than feared, leaving the potential for the shares to rise. But Ladbrokes lags rivals in mobile and on-line gambling and investors are losing patience with Chief Executive Richard Glynn, who unveils first-quarter figures on April 30th. The Sunday Telegraph's Questor column has run the rule over some of the UK's most popular shares. Its verdicts are:Lloyds Banking Group was the most traded share in the first quarter of 2014 and divides opinion sharply. The bank faces regulatory pressures after a series of misspelling scandals but it is also well placed to gain from the UK's economic recovery. Lloyds is expected to restart paying a dividend this year but some analysts say the prospective payouts are already reflected in the price. Questor said investors should sell because the shares' recent strong run already reflects progress made in the core business.Vodafone is a solid hold. After selling its stake in Verizon Wireless the mobile giant has plenty of cash for acquisitions and investment in new technology.Tesco offers a decent dividend yield but it is in a strategic hole. More bad news could be on the way as price competition intensifies so until there is a change in strategy investors should sell.Pessimists argue housebuilder Taylor Wimpey is too exposed to Government policies and interest rates and argue for taking profits. But income investors should stick with the shares, which are set to yield more than 6% over the next few years.Royal Mail is a stock to hold for long-term income. Its shares are up 61% since October's flotation but as a longer bet its expected dividend yield outweighs concerns about a review into access charges.Buy shares of Aim-listed sports agency TLA Worldwide, Midas advised in the Mail on Sunday. TLA, whose business is in the US, specialises in baseball, whose revenues are more than double those of the English soccer Premier League. TLA negotiates contracts for players and takes commission. It started paying dividends last year and its financial clout allows it to scout for new talented players in an industry with high barriers to entry. It is expanding in other sports and there is great potential for growth. Serial entrepreneur Nigel Wray owns 10%.Egypt-based gold miner Centamin is a speculative buy, Questor said in the Sunday Telegraph. Good news on a regional investment law eased concerns about the security of its mining licence last week and gave the shares a boost. Production is on the rise after a major investment phase and the gold price is starting to stabilise. The balance sheet is strong with no debt. The shares are interesting despite uncertainties and they could take off after a new dividend policy is established. However, they are "a high-risk option".Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.SF
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Paddy Power non-exec trims stake

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