Sunday share tips: Berkeley, Cineworld

Robert Stephens at the Telegraph issued British housebuilder Berkeley with a 'buy' rating and £39.69 price target on Sunday, highlighting that although there could be further issues on the horizon for the market as a whole, the group looked set to benefit from its cycles as it had in the past.

In his Questor share tips column, Stephens said the cyclical nature of the housing market provided Berkeley with opportunities to "buy low and sell high".

The London-focused outfit had taken advantage of low valuations as a result of the Global Financial Crisis to acquire more than £1bn-worth of land between 2009 and 2012, before house prices recovered.

Stephens pointed out that this had allowed Berkeley to return £12.34 per share to investors through buybacks and dividends between 2011 and 2019 and given that its shares traded below 700p at the depths of the crisis, long-term investors had indeed been "handsomely rewarded".

"Today the London property market is in another downturn and this has prompted fear among investors over the near-term prospects for housebuilders," said Stephens.

"Berkeley, though, has net cash of £975m. This gives it significant firepower to acquire land at prices that increase the prospect of high returns in future."

Over at the Sunday Times, Sabah Meddings said in her Inside the City column that with the Likes of Legally Blonde 3, a new James Bond film and a Top Gun sequel on the way in 2020, next year really needs to be a "blockbuster" for theatre operator Cineworld.

Earlier in August, Cineworld revealed admissions had fallen in the first half of the year after the box-office hit Avengers: Endgame failed to make up for a dismal line-up of films.

Chief executive Mooky Greidinger blamed a series of "disappointing sequels".

Cineworld saw sales fall 11% to $2.1bn, while pre-tax profits dropped around 13% to $140m. Shares have been on a downward trajectory ever since May, closing last week at 229.1p, giving the FTSE 250 company a valuation of £3.1bn, which Meddings said might have left the group "looking a little cheap".

"Analysts say investors are placing undue focus on film performance; they should be looking at the fundamentals. And dealing by big investors suggests optimism," said Meddings.

"Cinemas are traditionally recession-proof. And many think fears of a downturn because of families switching to streaming services are overplayed. Studios are increasingly focusing on large-scale productions that play well on the big screen, such as the Avengers films and James Cameron's Avatar 2."

Meddings, which issued the group with a 'buy' rating stated that industry trends were also "looking good", with its subscription card running ahead of forecasts since its launch in America at the end of last month.