Sunday share tips: Shell, United Utilities, ScS Group

Hold on to Royal Dutch Shell, said Questor in the Sunday Telegraph, B-shares in particular for UK investors to avoid double taxation. Shell's acquisition of BG Group is very logical but if the price of oil wallows for much longer it could see the end of Shell's long-running dividend history, with dilution for investors too. Shell's reserves need topping up and BG's stake in the massive gas field offshore Brazil will fix this and comes at a time when gas is becoming preferred to coal.

Compelling as the rationale is, the price £47bn price agreed for the deal earlier this year requires Shell to sell $30bn (£19m) of assets from next year and launch a share buy-back of $25m in 2017. But even though the purchase only really makes sense if oil recovers to at least $80 per barrel, everyone still seems keen, even Shell’s management team. But Shell’s shareholders are paying for the deal and now that oil prices are expected to stay lower for longer the message is clear: at current prices this deal destroys value and puts investors at greater risk.

If shares in United Utilities leak lower after interim results on Wednesday then they could present a good opportunity to buy. The water company will be taking a financial hit from paying compensation to customers for the water bug that struck for a few weeks this summer. Analysts calculate the company will have paid around £30m in total, which will knock pre-tax profits around 6% lower.

This is not ideal but it takes a lot more than that to derail UK water companies in the longer term as they are regional monopolies, with UU having around 7m customers in Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside. Water regulator Ofwat recently forced the company to reduce prices for the next five years, which will also be reflected in this week's results for the first time. But despite this and the microbe compensation, a water company like UU can still squeeze out more profits and it offers a dividend yield of not far from 4%.

Shares in ScS Group are worth buying, wrote Midas in the Mail on Sunday. The sofa and carpet group re-floated at the start of the year but slipped under their issue price after a rather early profit warning. Recent weeks have seen a slight bounce for the generously dividend-yielding shares. Some investors may remember the company's previous guise fell into administration in the peak of the financial crisis.

A private equity turnaround has seen flooring and new sofa brands and own-brands added to the offer, as well as white label sofas for House of Fraser. From around a hundred stores and a burgeoning website, the company is forecast to grow sales 4.5% to £305m in the year to July and plump profits up 24% to £7.7m, with a plush dividend yield of 7.5% also adding attraction to the shares.