Sunday share tips: Royal Dutch Shell, Asos, Spire Healthcare
Updated : 15:18
Royal Dutch Shell shares are worth buying for the dividend, according to the Sunday Times's Inside The City column. Acquiring BG Group in 2015 after oil prices had already collapsed, stretched Shell's balance sheet close to its limit, but it still pays out a hefty amount. Incoming cash no longer covers the dividend as well as paying for drilling new discoveries, resulting in net debt ballooning to a record $75bn at the end of June.
While crude prices have rebounded in recent months, the blue chip behemoth needs to keep the wolf from the door with several asset sales until one or two of its development projects move to the production stage. Projects for sale in the North Sea, Ireland, Asia and Africa could reap a £4-5bn, with an exit from Canada potentially doubling that and giving management some breathing room for a while at least.
Shares in Asos were a 'hold' for Questor in the Sunday Telegraph, ahead of the online fashion retailer's final results announcement on Tuesday. Not only has new chief executive Nick Beighton, promoted from CFO, brought it onto an even keel after the profit warnings of two years ago, but the weakness of the pound could see its numbers jump ahead of the market's forecast of £1.4bn sales.
After exiting from its China operations in the spring and settling a dispute with cycling brand Assos and German brand Anson's, analysts feel Asos now has a clearer run at the booming 'athleisure' and sportswear markets, as well as for tapping into the growing demand for online 'fast fashion' in the US, which lags the UK in this respect.
Spire Healthcare is a stock to buy, said Midas in the Mail on Sunday. Spire, formed from a spin-out of private hospitals from Bupa merged with a few others before listing in 2014, offers investors access to a consumer company that taps into ageing population investment theme through its operations of 39 UK hospitals and 13 clinics. While speculation lingers that South African rival Mediclinic, owner of almost 30% of the shares, could launch a takeover bid, the shares have dropped back 6% from their all-time high just above 400p.
Close to 50% of turnover is from medical insurance clients, with just under a third from the NHS. Private procedures offered by Spire range from the serious, such as a new hip or knee, prostate cancer laser treatment and removal of kidney stones, to the more aesthetic such as facelifts, breast enlargements and laser hair reduction, with paid-for procedures making up around a fifth of revenues and growing. Current investment in expansion will see two new hospitals opened and 20 new operating theatres.
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