Sunday share tips: Ocado, MJ Gleeson
(ShareCast News) - Ocado continues to make big bets on its business, namely on automation, but profits remain elusive, The Times's Tempus said.
At its new site in Andover, an army of robots can select 50 items ordered by customers in a matter of ten minutes, whereas rival Tesco still prefers using people for such tasks.
The logic behind Tesco's rationale is simple: cost. Ocado has spent another £175m on new facilities and equipment this year, on top of £153m last year.
In a similarly visionary or fanciful step, Ocado appears to be branching out into other business areas, such as modular construction, and has patented the technology.
Nonetheless, it has yet to crack its main market: groceries.
Last year, the company run by Tim Steiner added 30% to its debt pile, which reached £164.9m, yet profits on its £1.3bn of sales were just £12m.
Meanwhile, rival Amazon is nipping at its heels and will inevitably go nationwide with its Fresh delivery service.
Ocado could use some good news when it updates investors on Tuesday, whether on its ability to feed rising inflation to clients or on the still elusive deal with an international partner.
"I don't doubt its ability to deliver groceries punctually to well-heeled households in the home counties. Doing so profitably is another matter. Sell," Tempus said.
The torrid run in MJ Gleeson“s shares had further to go as the builder continued to build for the future, the Mail on Sunday's Midas column said.
Focused on building affordable housing in the North, Hampshire-based MJ Gleeson should benefit from the government's plans for the sector.
Westminster's White Paper on housing broadened the definition of affordable homes, which ought to simplify planning applications, the tipster explained.
After building 1,000 new homes in 2017, Gleeson is hoping to reach over 3,000 in the next few years, extending its reach as far south as Northampton and northern East Anglia.
Since it was originally tipped at the end of 2011, the stock price has risen to 612.5p, but Midas believed there was more to come.
"The company should continue to deliver. Shareholders should hold on to their stock, while long-term investors could also see value in these shares."