Shares portfolio: Tui Travel shines in the summer sun
With the summer holidays approaching it's a good time to get into Tui Travel shares, but analysts say there is little sunshine for Lloyds Banking Group.
The Standard's City team rates which stocks to buy and sell, with analysis on the top traders' deals and what to expect from the markets.
BUY: Tui Travel
Snap up shares in Thomson and First Choice owner Tui Travel, advises UBS. Analysts Jonathan Leinster and Kate Pettem reckon that investors have been fretting over the impact of the depreciation in the euro or the possibility of a late collapse in sales this summer, leaving the shares looking cheap.
The pair are optimistic about current trading. "Unless there has been a dramatic change [in demand in recent weeks], both volumes and margins will improve on last year," they said. However, they have trimmed their target price from 265p to 250p and prefer arch-rival Thomas Cook to Tui.
SELL: Lloyds Banking Group
Dump shares in Lloyds Banking Group, says Seymour Pierce. The stockbroker reckons that yesterday's sale of a portfolio of investments — an inheritance from its takeover of HBOS — will not have a material effect on the bank's accounts.
"We wouldn't see a disposal at a small premium to "book value" as a positive," says analyst Bruce Packard. "Presumably the investments were written down aggressively in the first half of last year, when Lloyds took a £13.4 billion charge for HBOS assets." He has a 41p price target for the black horse bank's shares.
HOLD: Pearson
Hang on to Financial Times and Penguin books publisher Pearson, says Royal Bank of Scotland. Analyst Paul Gooden, who was previously a seller of the stock, notes that the shares are now at the bank's target price. However, he reckons that the group should sell the Pink 'Un because the newspaper does not "fit well with the rest of Pearson's portfolio".
Gooden is also concerned for its US education arm, which has performed well during the downturn thanks to a rise in college admissions. He predicts growth at the division will fall to 2% next year.
Trader talk
Thames River Capital founder Charlie Porter has beefed up his stake in F&C Asset Management by piling a further £253,753 into the company.
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It follows the news at the end of April that the Thames River chief executive ploughed more than £1 million of his own wealth into the F&C business, which is in the process of acquiring Thames River Capital from its backer Sir John Beckwith. Porter, who is set to join the F&C Asset Management executive committee as part of the acquisition, bought a further 500,500 shares in F&C Asset Management at a price of 50.7p each.
F&C has seen significant buying more recently from its chief executive Alain Grisay, who topped up his stake through the purchase of 500,000 shares in the company. F&C's shares are currently valued at around 52.5p.
Tomorrow's agenda
High Street giant Marks & Spencer will post its first-quarter figures, which will be flattered by miserable comparatives with last year. Analysts in the City reckon food sales will be up by about 1.5%, with Nomura analyst Fraser Ramzan predicting same-store sales to be up 4% in general merchandise, which includes clothes. That would mean a third consecutive rise in underlying quarterly sales for Marks & Spencer, though shareholders may be concerned about any slowing rate of improvement. Ahead of the VAT rise to 20% in January, investors will want to know how M&S is planning for any potential dip in the consumer recovery. Last week, M&S's rival Debenhams said trading had started to become tougher since the June 22 "austerity budget", with shoppers also distracted by the World Cup.
Recruitment firm Robert Walters has seen rising profits so far this year, with the relatively slow recovery in the British jobs market being outpaced elsewhere. Tomorrow it will issue a pre-close trading update, with Asia-Pacific expected to be a big focus after delivering year-on-year growth of 63% in the first quarter. Altium analysts expect "continued strong momentum on a annual basis", flagging up banking as a key driver in the UK, which accounts for almost a third of revenues. "Although there is likely to have been an element of disruption to trading as a result of the general election," the analysts warn.
