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Sunday share tips: Virgin Wines, Moonpig

The Financial Mail on Sunday’s Midas column told readers to ‘buy’ shares of Virgin Wines telling them that fears that the company would be negatively impacted by the snarl-up in global supply chains were overdone.
Its chief executive officer, Jay Wright, had foreseen that potential problem and moved to avoid it.

As a result, the company’s warehouses were full and Virgin Wines had watertight contracts with courier services.

Indeed, sales were up by 13% over the three months to 30 September and customer by numbers almost 11%.

UK wine enthusiasts spent £2.4bn each year on alcoholic drinks, including £750m online, while Virgin Wines´s sales were still under £100m.

Analysts were anticipating a 25% rise in profits to £6.5m over the year to June 2022 and to £8m in 2023.

Furthermore, while dividend payouts were unlikely in the next two to three years, given Virgin Wines’s intention to invest in growth, further out they were a distinct possibility, the tipster said.

“Virgin Wines has been unduly punished since joining the stock market. At £1.80, the shares are a buy.”

The Sunday Times’s Sabah Meddings told her readers to “avoid” stock in online retailer Moonpig.

In February investors had piled into shares of the ‘Covid winner’ pushing its market value to nearly £1.5bn during their first day of trading on the London Stock Exchange, against just £1.1bn now.

The company did well enough during lockdown, with sales running up by 113% as high street rivals Card Factory and Clinton’s remained closed.

To back up her case, she cited analysts at Davy, who thought that, at a forward price-to-earnings ratio of 33.9, “the risk reward is not compelling”.

Now restrictions had been eased and the long-term trend for greeting cards being sent was pointing lower, although Omicron might push customers back online.

“Moonpig is due to report results for the six months to October 31 on Thursday, when investors will see how much its big splash out on advertising boosted market share. Despite the drift in its shares, Moonpig needs to do more to justify its valuation.

“Avoid.”

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