Sunday share tips: Direct Line, Laird, Brewin Dolphin

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Sharecast News | 28 Feb, 2016

Updated : 17:41

Direct Line shares are worth holding, said the Sunday Times' Inside the City column ahead of Tuesday's annual results for the insurer. Full year profits are forecast to have reversed moderately, but things look better going forward, with a new online marketing campaign launched last week with 20-something online blogger Alfie Deyes.

Deyes, famous with millions of 16-19-year-olds on YouTube for his Pointless Blog, has been signed up as a marketing tool, taught to drive and insured on the company's telematics policy for a year.

Competition for customers in the insurance industry has been cut-throat over recent year, driving premiums down and leaning some firms to admit defeat. But with some of these departures, premiums have begun to bounce back, with analysts expecting prices to have recovered towards the end of last year, which should filter through to profits later. The results will also provide an opportunity to hear details on UK flooding costs and December's loss to rival RSA of a big Nationwide contract.

Avoid wealth management companies like Hargreaves Lansdown, St James's Place, Old Mutual and Charles Stanley, says Questor in the Sunday Telegraph, though Brewin Dolphin has potential. They are difficult to compare, however, with FTSE 100 giant HL focused on retail investors, ISA and pension savers, while the others are generally focused on offering a more active service to the more prosperous. The cost-cutting slide towards internet services can be dangerous, with the City watchdog warning recently of the need to ensure customers are given appropriate advice.

The recent months of extremely choppy stock markets have hit share issuances, a key revenue-generating service for these companies. Shares in Brewin Dolphin have fallen sharply but looks to be recovering under new management. HL shares are changing hands for what seems an overly demanding p/e ratio of 37. Charles Stanley is also attempting to turn itself around though until a progress becomes clearer it is best avoided.

Shares in Laird are a buy for the long term, according Midas in the Mail on Sunday. Laird's main customer is Apple, to which it supplies technology that protect electronic components from heat and electromagnetic interference, with Samsung and other smartphone makers also important clients, means it has suffered in recent months due to the hot competition in the smartphone industry. Laird has been expanding its end markets and client numbers in recent years, including other telecom technology, automotive, medical and consumer goods industries.

Aerials are also big part of its business, especially to car makers with the rise of the 'smart car'. Another area that is expected to boom is the 'internet of things' (IoT), which connects objects wirelessly as part of smart-home technology for example. With the number of internet-connected devices to more than triple over the next four years, Laird is better positioned to cope with slowing iPhone sales and concerns about global economic prospects.

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