Defensive shares and dollar earners drive Frederick & Oliver’s 2019 top share picks

UK Investor Magazine
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Defensive shares and dollar earners drive Frederick & Oliver’s 2019 top share picks

More defensive, dollar earners have excelled so far in 2019 as investors take advantage of the sell off in 2018.

An apt place to find evidence of this is the Top Stock Picks for 2019 released by Frederick & Oliver shortly before Christmas.

When selecting their share picks for the coming year, the London-based stockbroker set out to provide stability to a portfolio of shares in a year that is likely to be dominated by uncertainties from Brexit and a global tightening in central bank monetary policy.

The strategy Fredrick & Oliver outlines involved a focus on shares that earned revenue in dollars or those that possessed ‘defensive’ attributes.

This would provide a natural defence against any wobbles in sterling and also ensured relative stability of cash flows though dividends at a time when volatility increased.

The inverse relationship between GBP/USD and the FTSE 100 has been a key theme since Brexit and this is likely to continue as we move towards the official leave date and the subsequent trade negotiations.

At the time of writing this has proved to be a deft move with their selections returning an average of 4% from the time of publication at the end of last year.

An example of the shares included in the report is FTSE 100 precious metals miner Fresnillo, up 18%.

Download the Top Stock Picks for 2019 report below for a full breakdown of the shares included.

Top Stock Picks for 2019

Free report containing the Top Stock Picks for 2019 designed to bring stability to a share portfolio in 2019

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In addition to the careful selection of a range of UK listed equities forming Frederick & Oliver’s Top Stock Picks for 2019, there was also the recognition of value in the US technology sector.

This formed the basis of a research paper on the sector which analyses the so called ‘FAANG’ shares. These are Facebook, Apple, Amazon, Netflix and Alphabet (parent company of Google).

These shares have drove stocks market momentum through 2018 but were heavily sold towards the end of the year, creating key buying opportunities for a number of the FAANG shares.

Frederick & Oliver rated each of the shares in the sector buy or sell with the tips providing a cumulative 44% return at the time of publishing this article.

With many of the shares well below all time highs, there could well be further to go in the world’s largest technology companies.

Download the full report below to discover which FAANGs earned a buy rating and the ones rated a sell.

US Technology Shares Report

Free report containing US FAANG share tips

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Ryanair shares sink as over capacity and rising costs erode margins

UK Investor Magazine
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Ryanair shares sink as over capacity and rising costs erode margins
Shares in Ryanair (LON:RYA) fell on Monday after the airline posted a loss for the third quarter. While the number of passengers rose to 32.7m from 30.4m in the same period as a year prior, average fares fell and costs rose, driving a €19.6m loss for the period. Ryanair joins a list of airlines facing rising costs and overcapacity that are ultimately eroding margins. Much of the rise in costs was attributed to higher fuel costs and staffing. Brent Oil touched $85 a barrel in the period, but has since dropped back to around €65 a barrel which is likely to provide some relief in the current quarter. Ryanair are locked into a race to the bottom on prices with average fares falling beneath €30. Despite the drop in average fares, overall revenue rose 9% to €1.53bn as ancillary services such as priority boarding helped the top line. Michael O’Leary, Ryanair CEO, commented on the results: “While a €20m loss in Q3 was disappointing, we take comfort that this was entirely due to weaker than expected air fares so our customers are enjoying record low prices, which is good for current and future traffic growth. While ancillary revenues performed strongly, up 26% in Q3, this was offset by higher fuel, staff and EU261 costs.” On Brexit, Ryanair said the ‘risk of a “no deal” Brexit remains worryingly high’ and that they had taken a number of step to secure routes and imposed shareholder restrictions on investors from outside of the EU to ensure the group remained ‘EU-controlled;. Shares in Ryanair (LON:RYA) fell over 4% in early trade on Monday, briefly touching €10.83.
The Ryanair share price has nearly halved in just 18 months after reaching intraday highs of €19.78 in August 2017. The selling has been sector wide however, with peers easyJet (LON:EZJ), Wizz Air (LON:WIZZ) and International Consolidated Airlines (LON:IAG) all slipping back from highs over the past 6 months.

CyanConnode Presentation – UK Investor Magazine Investor Evening 31st January 2019

UK Investor Magazine
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CyanConnode Presentation – UK Investor Magazine Investor Evening 31st January 2019
John Cronin, Executive Chairman of CyanConnode presents at the UK Investor Magazine Investor Evening 31st January. CyanConnode is a specialist in Internet of Things (IoT) technology with a focus on smart meters

Marc Kimsey, Equity Trader at Frederick & Oliver outlines his share tips for 2019

UK Investor Magazine
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Marc Kimsey, Equity Trader at Frederick & Oliver outlines his share tips for 2019

Deutsche Bank swings to first annual profit since 2014

Nicole Jeary
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Deutsche Bank swings to first annual profit since 2014
Deutsche Bank (ETR: DBK) returned to profit in 2018 for the first time in four years, however a disappointing fourth quarter dampened investor optimism. The German bank reported annual profit of €341 million (£299 million), compared to losses of €735 million back in 2017. Nevertheless, this proved significantly lower than analyst expectations of €422 million, overshadowing the bank’s return to growth. Moreover, Deutsche’s also disappointed in the final quarter of the year, reporting a loss of €319 million. Fixed income revenues also fell considerably to €786 million, down 23% as a result of “challenging market conditions.” Having missed earning forecasts, Deutsche Bank said it intends to ramp up its cost saving initiatives. Back in April, the embattled bank announced the departure of John Cyran as chief executive, after years of successive losses.
Cyran was replaced in April 2018 by Christopher Sewing, who has a background in retail. Christian Sewing, Chief Executive Officer, said of the latest annual results: Our return to profitability shows that Deutsche Bank is on the right track. Now, our priority is to take the next step. In 2019 we aim not only to save costs but also to make focused investments in growth. We aim to grow profitability substantially through the current year and beyond.” As of April 2018, the bank was the 15th largest bank in the world by assets. Deutsche Bank has been struggling since the financial crisis after a series of scandals and legal battles. In January 2017, the bank was fined $425 million by the New York State Department of Financial Services as well as £163 million by the UK Financial Conduct Authority (FCA) regarding accusations of failing to adequately monitor money laundering in Russia. Shares in the German lender are currently down -3.20% as of 12:28PM (GMT).
     

Comptoir performance “in line with market expectations”, shares up

Nicole Jeary
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Comptoir performance “in line with market expectations”, shares up
Comptoir shares rose on Friday after the company confirmed that its annual results would be in line with market expectations. The Lebanese mediterannean restaurant chain said on Friday that trading for the 52 weeks to 31st December 2018 proved “in line with market expectation”, with a strong finish expected in the second half of the year. Over the course of the year, the group opened two sites in Birmingham and London Bridge. In addition, Comptoir opened its second franchise site with HMS Host in Cheshire Oaks. In September, the company posted its interim results for the period ended 30 June 2018. In the trading update, Comptoir posted group revenue of £15.7 million up by 19.8%, compared to 13.1 million reported in 2017. In addition, gross profit for the period came in at £11.3 million, proving an increase ofup 19% £9.5 million in 2017. The restaurant chain finished the year with a total of 27 managed restaurants and 4 franchise sites. The company was incorporated in 2006 and was listed on the AIM market of the London Stock Exchange in 2016. Despite the encouraging market update, the UK restaurant sector has been struggling as of late, with rising costs and economic uncertainty proving challenging. Various well-known restaurant chains such as Jamie’s Italian, Prezzo and Byron all announced site closures in 2018. Shares in Comptoir (LON:COM) are currently +2.80% as of 11:46AM (GMT).  

TSB posts £105m loss after IT chaos

Nicole Jeary
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TSB posts £105m loss after IT chaos
TSB reported a £105 million loss in its full-year results for 2018, after racking up costs as a result of an IT issue. The bank incurred heavy costs as a result of a computer system update malfunction. TSB posted the hefty loss as opposed to the £162.7 million profit in 2017, after the update plunged the company into chaos. Alongside IT issues, costs were also incurred as a result of customer compensation and fraud. The bank said that £125 million was spent on customer compensation and £49 million was as a result of fraud claims and operational losses. Meanwhile, £122 million was as a result of IT issues, and £33 million was lost from waived fees and charges. Richard Meddings, executive chairman, said in a statement: “Last year was TSB’s most challenging year. But we enter 2019 with renewed ambition to re-emerge as the leading challenger bank in the UK – firmly on the side of the customer.” The statement added that the Board decided to award employees £1,500 each in December, in recognition of the extra workload. Executives would be excluded from bonuses. Back in November, TSB announced the appointment of Debbie Crosbie as chief executive. She is set to take up the role in Spring. TSB bank is a subsidiary of Sabadell Group (BMAD:SAB). The bank was created after the division of Lloyds TSB (LON:LLOY).  

Unilever stockpiling ice-cream ahead of Brexit date

Dina Caruso
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Unilever stockpiling ice-cream ahead of Brexit date
The Guardian has reported that Unilever (LON:ULVR) is stockpiling ice-cream ahead of the UK’s departure from the European Union. A few weeks’ worth of Ben & Jerry’s and Magnum bars are being stockpiled to ensure that that the UK will not face a shortage of its favourite brands once the official Brexit process begins. The company will also be stockpiling its deodorant brands. These include Sure, Lynx and Dove. Unilever’s Chief Executive, Alan Jope, said that “we have built inventory on either side of the Channel.” Additionally, he confirmed that “It’s weeks of inventory – not months or days.” “If I was in the designer handbag business then I might have built further [inventory] cover but we’re not, we are in fast-moving consumer goods and one of the things we have learned is, when you build inventory, it can end up being the wrong mix of product.”

Unilever is not the only retailer to stockpile its products ahead of the Brexit date.

Nestle struggled to stockpile any further ahead of Brexit as its warehouses were almost entirely full of products. Moreover, Mondelez International, one of the world’s leading snack companies, also announced it would stockpile products and ingredients in fear of a Brexit product flow shutdown. Mondelez owns the popular Cadbury chocolate brand, as well as Milka, Oreo, Philadelphia and Toblerone. Equally, dairy company Ornua began to stockpile cheddar in the UK in order to avoid the impacts of price-hikes post-Brexit. As the prospect of a no-deal Brexit looms closer, companies brace themselves for all possible scenarios. Unilever also announced its full-year 2018 financial results on Thursday. The company experienced profitable growth, with an increase in its underlying full-year sales. However, it warned that market conditions were “volatile”. Indeed, CEO Alan Jope said that he expected these tough market conditions to remain “challenging” in 2019. At 14:46 GMT Thursday, shares in Unilever plc (LON:ULVR) were trading at -2.31%.

Advanced Medical Solutions acquires Sealantis for $25 million

Dina Caruso
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Advanced Medical Solutions acquires Sealantis for $25 million
The surgical and advanced wound care company, Advanced Medical Solutions Group (LON:AMS), announced on Thursday that it has acquired the Israeli-based company Sealantis for $25 million. Sealantis is a medical device company based in Israel. Sealantis’ technology platform has several synergies with Advanced Medical Solutions. The most notable are within the sales, marketing, regulatory and operational areas. Sealantis develops medical device products that mimic the mechanism of adhesion of algae to rocks in water. The first product is expected to enter the European market from the first-half of the 2021 financial year. The acquisition of Sealantis will strengthen the company’s current product portfolio. CEO of Advanced Medical Solutions Group, Chris Meredith, commented on the acquisition of Sealantis: “This acquisition is in line with our strategy to acquire technologies that are complementary to our surgical portfolio as well as allowing us to leverage our global routes to market. The acquisition enhances our access to a significant and high-margin market in internal surgery, which includes areas of unmet need for effective and absorbable internal sealants, a market estimated at $1 billion.” “We are particularly excited to welcome Sealantis’ innovation team of R&D experts to AMS and look forward to working alongside them to develop the technology in a wide range of potential applications and indications.” “As we work towards the commercialisation of Seal-G Surgical Sealant over the next 18 months, we expect to maximise the full value of the platform and this innovative technology. AMS continues to actively monitor and evaluate other acquisition opportunities to capitalise on its strong financial and strategic position.” In the pharmaceutical sector, Shield Therapeutics recently announced that it had made developments in its iron-deficiency study. It also announced the appointment of a new chairman earlier this month. At 13:59 GMT today, shares in Advanced Medical Solutions Group plc (LON:AMS) were trading at +4.30%.

Italy slips into its third recession in a decade

Dina Caruso
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Italy slips into its third recession in a decade
Home to the third-largest Eurozone economy, Italy has slipped back into a recession. New GDP figures demonstrate that its economy has decreased by 0.2% in the last three months of 2018. This follows a 0.1% fall from the third quarter. Analysts usually define a “technical” recession as two successive quarters of decline. Given the size of it’s economy, Italy’s recession has hindered the growth of the wider Eurozone. The Eurozone only grew 0.2% in the final three months of 2018, the same increase as the previous quarter. Last year, the right wing League party formed a coalition with the anti-establishment Five Star Movement. It spent months quarrelling with Brussels over its ambitious budget plans. Rome’s original deficit plans simply breached rules on government borrowing. The 2.4% figure may have been below the EU’s deficit limit of 3%, but it remained far too high for a country whose debt is as big as Italy’s. This seems to have damaged the country’s economic confidence and exacerbated the situation. Given that the country has now entered a recession, the growth targets of the approved 2019 budget appear highly unrealistic.

Italy will be entering its third recession in a decade.

Since early 2017, the Italian economy has been weakening. It has recently been damaged by a slowdown between its trading partners, including Germany and China. The Italian statistical agency, Istat, has said that the recession is primarily due to a “decrease of value added in agriculture, forestry and fishing as well as in industry.” Deputy Prime Minister Luigi Di Maio said that the data “certified the failure of the entire political class which Italians sent packing” following last year’s election. Luigi Di Maio has also said that the recession should be taken as an indication that the EU budget rules must be relaxed. According to the Deputy PM, a relaxation of the rules will allow Italy breathing space to stimulate its economy back into growth.  
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