Sunday share tips: ReNeuron, Clipper Logistics, RM Secured Direct Lending
Shares of ReNeuron are for brave investors only, said the Sunday Times' Inside the City column. The stem cell pioneer is scheduled to publish the results of second-phase clinical trials of its potential stroke paralysis treatment alongside its interim results on Monday. ReNeuron's therapy for stroke disability involves injecting CTX neural stem cells generated using the company's proprietary technologies into the patient's brain.
If the 21-patient pilot study, the world’s first fully regulated clinical trial of a neural stem cell therapy for disabled stroke patients, is a success then the company would progress to a final-stage trial in more patients and then look to turn it into a commercial product. After a fundraising in 2015, the company has £65.7m in the bank, which should provide for around two years' worth of future drug development. Fingers crossed, said the column, for ReNeuron as the rest of the pipeline is a lot less advanced than the CTX stroke disability candidate.
Clipper Logistics shares are worth holding, according to Questor in the Sunday Telegraph. Retail logistics is Clipper's bread and butter, with the rise and rise of internet shopping being a big boon, especially the need to remotely return items. Clipper says its Boomerang returns service is the best as it ensures goods are returned in a state where they are ready for resale, which saves retailers time. Marks & Spencer is a customer, while Clipper's 10-year contract with John Lewis includes operating its national returns centre.
This contract with John Lewis also includes click-and-collect services, where items are bought online and picked up in store. This service is also being opened up to other clients and is expected to be a growth driver, along with expansion in Europe sometimes on the back of contracts with existing UK clients. Sales have grown on average by a compound rate of around 31% in the last decade and a half, while profit margins have remained little altered - and are expected to be slightly boosted by the move into click and collect. First-half results last week indicated trading continues to be positive, with significant increases in activity in all sectors.
Income hunters looking for a long-term investment might buy RM Secured Direct Lending, said Midas in the Mail on Sunday, which is being floated by parent RM Capital in London with a planned 4% dividend next year rising to 6.5% from 2018, paid quarterly. The business gives £2-£10m loans to SMEs and mid-sized outfits that have visible cash flows and are typically from non-cyclical industries, offering asset-backed lending secured against assets such as real estate or plant and machinery and/or income streams such as account receivables.
The fund is tapping into a market that has seen smaller firms struggled to borrow from high street banks if their financial needs are relatively complex. As a result, RM generally lends at rates of 8-12% due to their more complex nature and higher risk of small companies, which is how the fund can pay such a chunky dividend. Risk is spread across sectors and via the secured nurture of the loans.
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