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Five shares the pros are buying and selling

Our regular roundup of trades by professional investors, featuring Richard Buxton's latest buy.

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Key stats
Dividend yield 0.9%
Market capitalisation £32m
No. of shares out 54m
No. of shares floating 42m
No. of employees 396
Trading volume (10 day avg.) 0.2m
Turnover £63m
Profit before tax £3m
Earnings per share 3.84p
Cashflow per share 4.82p
Cash per share 18.58p

Driver Group (DRV)

Who’s trading? Citywire AA-rated Matthew Tillett

The trade: Allianz’s UK value specialist ramped up his stake in construction consultancy Driver Group from just under 2% of the shares to 5.8%.

How have the shares performed? A steady weakening from a recent peak of 85p in October has quickened, with the shares trading at 59p on Friday.

What does the company say? Investors dropped the business following a profit warning as it cautioned that ‘local market conditions’ across the Middle East and Asia were slowing new business, with an updated forecast ‘slightly below’ 2018’s £3.5 million a big markdown from the £4.4 million earlier tipped.

What’s the outlook? Brokers had previously been squarely behind a turnaround story and largely continue to rate it a ‘buy’ on a median target price of 305p, despite a January downgrade from Barclays from 380p to 265p. Issuing the warning, the company insisted that it ‘continues to perform well’ on an underlying basis.

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Key stats
Dividend yield 4.8%
Market capitalisation £793m
No. of shares out 500m
No. of shares floating 452m
No. of employees 6,701
Trading volume (10 day avg.) 2.7m
Turnover £899m
Profit before tax £123m
Earnings per share 12.49p
Cashflow per share 19.34p
Cash per share 12.20p

Pets at Home (PETSP)

Who’s trading? Richard Buxton

The trade: UK equity giant and Merian UK Alpha manager Richard Buxton has trimmed his exposure to Pets at Home from just over 10% of the shares to 9.9%.

How have the shares performed? After sliding 62% over the three years to October, to a record low of 113p, the stock has bounced, accelerating in February on its induction into the FTSE 250. The shares were trading at 158p on Friday.

What does the company say? The big box retailer has not been immune to the troubles afflicting the UK high street, with additional pressure piled on by a shortage of EU-trained vets causing strain in its pet care business. More recently it reported a strong Christmas however, with sales up 5.1%.

What’s the outlook? Initial City exuberance on Pets at Home’s prospects following its 239p flotation in 2014 has cooled in recent years on operational challenges, and that disappointment continues to be reflected in a four-to-one ratio of analysts rating it negatively, on a median price target of 134p.  

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Key stats
Dividend yield 3.4%
Market capitalisation £1,282m
No. of shares out 143m
No. of shares floating 134m
No. of employees 34,429
Trading volume (10 day avg.) 0.5m
Turnover £1,761m
Profit before tax £158m
Earnings per share 54.63p
Cashflow per share 73.15p
Cash per share 156.66p

Savills (SVS)

Who’s trading? Citywire AA-rated Julian Fosh and Anthony Cross 

The trade: Liontrust’s UK equity stars trimmed their stake in upmarket estate agent and property consultant Savills from 5.1% of the shares to just over 5%.

How have the shares performed? After dropping more than 30% in 2018 to hit a two-year low of 678p the shares have since recovered almost all of that, but remain short of last year’s peak of £10.34. The shares were trading at 896.5p on Friday.

What does the company say? Savills defied Brexit doldrums which have brought high-end property transactions in London and the Home Counties to a near standstill to report revenue 10% higher and underlying profit 2% higher last year, to £140.5 million. ‘The performance of our less transactional business lines was key to this performance,’ it said.

What’s the outlook? While Savills cheered its resilience it emphasised this may not last. ‘The year ahead is overshadowed by macro-economic and political uncertainties across the world,’ it added, saying the impact was hard to predict, but demand was likely to fall. Peel Hunt cut the stock from ‘buy’ to ‘hold’ at 925p.

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Key stats
Dividend yield 2.6%
Market capitalisation £134m
No. of shares out 69m
No. of shares floating 50m
No. of employees 211
Trading volume (10 day avg.) 0.4m
Turnover 161m USD
Profit before tax 25m USD
Earnings per share 0.16 USD
Cashflow per share 0.33 USD
Cash per share 0.33 USD

Taptica (TAP)

Who’s trading? Citywire A-rated Andy Brough

The trade: Schroders’ small cap boss upped his stake in mobile ad tech business Taptica from 15.1% of the shares to 16.4%.

How have the shares performed? Taptica is off 60% from 509p in early 2018, with a difficult year for tech generally made tougher by the December resignation of boss Hagai Tal over a conduct issue.

What does the company say? 2018 trading was in line with expectation but Taptica last month cautioned that business had recently become ‘varied’ with ‘industry wide headwinds’ expected to blow for the remainder of the year. That was a key rationale for a recent audacious takeover of larger rival RythymOne in an all-share deal.

What’s the outlook? Fears over peaky tech valuations and repeated data scandals have weighed on the sector recently but broker Panmure Gordon warns the more tangible issue of Facebook and Google’s market clout will soon be the bigger threat forcing the ad industry to ‘consolidate radically’. Berenberg rates it a ‘buy’ with a 340p target.

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Key stats
Dividend yield 1%
Market capitalisation £289m
No. of shares out 48m
No. of shares floating 40m
No. of employees 360
Trading volume (10 day avg.) 0m
Turnover £81m
Profit before tax £17m
Earnings per share 16.70p
Cashflow per share 27.50p
Cash per share 14.64p

Zotefoams (ZTF)

Who’s trading? Citywire A-rated Roland Arnold

The trade: BlackRock’s UK small cap expert upped his stake in high-tech materials manufacturer Zotefoams from 10.2% of the shares to 10.3%.

How have the shares performed? Zotefoams has more than doubled over three years. The shares spiked in December after fund giant Oppenheimer revealed a 5% stake, but much of that jump has now been given back.

What does the company say? In its most recent update last November the high-tech materials business reported ‘record’ third quarter sales as it upgraded its profit forecast for the first nine months of the year, on a 16% increase in revenue for the period following ‘substantial progress’, leaving management ‘confident about the future prospects’.

What’s the outlook? The sudden spike in Zotefoam stock at the end of 2018 has attracted substantial retail interest with the company, which provides lightweight foams used by manufacturers from Nike to Airbus. The recent surge outstripped a median City target price of 606p, however.  

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