Sunday share tips: Centrica, Lancashire Holdings

The Sunday Times's Lucy Tobin told her readers to book their profits in Centrica and 'sell'.

Yes, the energy outfit had benefitted tremendously from the disruptions brought on by the war in Ukraine.

Indeed, it had shifted from net debt of £3bn in 2021 to £2.7bn of net cash.

But the company's prospects looked "dull", the tipster added.

She also noted Centrica's emphasis on share buybacks, which she judged revealed a focus on propping up short-term shareholder demand, instead of long-term investments.

Sam Wahab at Liberum agreed, telling clients that the shares were discounting an "overly optimistic" assessment of Centrica's long-term cash return and investment plans.

Furthermore, analysts were not anticipating oil supply to be drastically disturbed even if a full-blown war erupted with Iran.

On the retail side meanwhile, nimbler rivals more focused on customer service had stolen a part of its lunch.

The Financial Mail on Sunday's Joanne Hart tipped shares of Lancashire Holdings as a 'buy and hold' for investors.

She believed that the "highly profitable" firm would continue in that vein, so the shares, then at 586p, should gain in value.

Full-year premium income was ahead by 17% in 2023 to $1.9bn, while large claims dropped from $329m to $106m.

Lancashire had also hiked its dividend payout by half and declared a special 50 cent payout.

The dividend policy had also been bolstered and another special payout was likely in the current year, Hart said.

Higher interest rates meanwhile were bolstering the company's investment income and the insurer had been diversifying.

"Yet the shares have fallen from £8.50 to £5.86, hit by fears about turmoil in the Middle East and war in Ukraine," she said.

"These seem overdone, given that Lancashire is in the business of risk and has proved its mettle over many years. Decent dividends boost the stock's appeal. Buy and hold."