Sunday share tips: Smart Metering Systems, Saga, Sirus Real Estate
(ShareCast News) - Smart Metering Systems shares were a 'buy' in the Sunday Times' Inside the City column. As part of a £11bn plan, the UK government aims for 53m smart meters - which are electronically linked to your electricity and gas supplier to allow you to monitor and control in near-real time how much energy you use - be fitted in every home and small businesses by December 2020. AIM-listed SMS, which has contracts to instal 2.5m of that total, is only listed company of the four that own and instal smart meters.
Broker Panmure Gordon calculate SMS could target a market of roughly 22m homes, with water meters another way of expanding its customer base. Risks for the company include the government delaying its 2020 deadline. Along with other 'internet of things' devices, smart meters have been seen as potentially vulnerable to hacking or errors such as households being £30,000-plus false readings. But while there may be bumps away, smart meters are here to stay.
Buy shares in Sirius Real Estate, said Midas in the Mail on Sunday, as it should be a beneficiary of Brexit. The property investor, which has a portfolio of 44 business park in Germany, has just moved up to the main market and attracted Neil Woodford as a new investor. The Sirius strategy is to buy sites where it can improve things - Germany is one of the most promising property markets in Europe but it has many old business parks in need of a scrub up - and therefore raise rents and enjoy capital gains on the property. Through its focus on Frankfurt, Munich and Berlin, any flow of companies to Germany from Britain due to Brexit should boost demand.
In the last four years, the value of Sirius' properties has doubled to €800m thanks to increases in valuations from renovation at sites, wider property market price growth and acquisitions. Rather than the REIT method of paying almost all income as dividends, Sirius pays out 65% and uses the rest to invest. This year's dividend is estimated to hit 2.47p, which gives a yield of just under 5%.
Sell Saga shares said Questor in the Sunday Telegraph, as since their 185p flotation in 2014 they have gained little ground. Results this week are accompanied by a capital markets day where chief executive Lance Batchelor will give more detail on his strategic plans to leverage the company's huge database of senior citizens as a broker of third-party services, which should require lower capital and so boost dividend returns.
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