STOCKS TO WATCH: Deliveroo investors face a long wait for tasty profits, while oil stocks still have lots going for them
If Deliveroo’s status as the year’s biggest float flop was in doubt, a dismal December has left it languishing at record lows. It was priced at £3.90 on launch, and trades at £2.12 now.
You might expect the takeaway specialist to benefit from the looming threat of Omicron-related restrictions, forcing people to order in.
But investors have been spooked by several factors, including rapid wage growth across the world; threats of new laws on gig economy workers in Europe and fierce competition from the likes of Uber Eats and Just Eat.
AJ Bell investment director Russ Mould says Deliveroo are ‘winning more customers but failing to turn them into a profit’
AJ Bell investment director Russ Mould adds: ‘Stock market sentiment also seems to be turning away from would-be disruptors such as Deliveroo, who are winning more customers but failing to turn them into a profit.’
The sell-off has hit its biggest shareholder – Amazon, whose founder Jeff Bezos will doubtless barely notice. But the thousands of small investors and customers who bought into the float are likely to feel more aggrieved.
Jacob de Tusch-Lec has developed a reputation as a reliable cash machine hunter. The Danish fund manager runs London-listed Artemis Global Income with co-manager James Davidson, and scours the world for stocks with plenty of dough for dividends.
Hargreaves Lansdown has tipped the fund as one to watch next year after a stonking 12 months. It is invested in several stocks that have benefited from the pandemic, including AP Moller-Maersk, the shipping giant riding the boom in freight rates, and Pfizer, the pharma company raking in huge profits from its Covid vaccine. Tusch-Lec isn’t averse to taking a punt on higher risk smaller companies too.
Anyone thinking that the COP26 climate conference was a sell signal for big oil stocks should hold fire.
Shell, the £126billion energy behemoth, still has plenty going for it in 2022.
Principally it has the highest exposure among its rivals to natural gas supplies, which forecasts suggest will remain tight right through to 2025.
A ramp up in its plans to buy back shares should also spur fresh gains in the stock.
For the bold investor, Jefferies has a couple of punchy picks. The broker argues that caterer Compass is on its way back after the pandemic shut down canteens and live events. Analysts say smaller rivals have struggled more, and could be ripe for acquisition by Compass, boosting its revenues. A potential £1.10 special dividend has been pencilled in.
Jefferies retail analyst James Grzinic also says a recovery in catering and restaurant supplies should boost wholesaler Booker and its parent Tesco, now trading at a discount to overseas peers. After private equity buyouts of rivals Asda and Morrisons this year, perhaps public investors will finally get Tesco’s share price motoring again after