Sunday newspaper share tips
Each week we round up the Sunday newspaper share tips and the views of the mid-week tipsters too. For the Mail on Sunday's stock picks read the Midas archive.
And check out the mid-week share tips.
Sunday Telegraph
A declining beer market has seen pub operators looking elsewhere to grow their business. Greene King's deal last week to buy 36 Loch Fyne seafood restaurants for £68m has excited the City. The group is banking on consumers spending more time and money eating out, and early reports suggest it is looking to double the number of Loch Fyne restaurants by converting some of its existing pub estate.
Analysts believe the average profit could double at converted sites. Greene King's managed pubs contribute an average of £177,000 in annual earnings, compared to £280,000 at Loch Fyne sites. The deal should be earnings enhancing from the first year. Moreover, Greene King, which has sales of £820m, continues to perform well given the washout that has blighted most pub groups this summer.
Earnings are set to grow by 4% this year and the firm also has plans to unlock value from its property through a joint venture deal. There could be further value to be had from the stock, buy at 877p.
International car dealership Inchcape reported better-than-expected half year results earlier this month. The company, which has a market capitalisation of £2.2bn, only began focusing on cars about eight years ago.
In its interims, Inchcape reported records profits in most of its regions: Australia, Greece, Belgium, the UK, and emerging markets, where sale doubled and profits tripled. Only mainland Europe saw a muted performance. In the UK, the company is focusing on premium brands like BMW, Lexus, Mercedes and Audi.
It plans to offload around 50 underperforming dealerships to invest in acquisitions in emerging markets. Despite a weakening of the used car market, the group managed to keep margins relatively stable. Buy on weakness at 450.75p.
Investors in oil and gas explorer Serica Energy have had a rollercoaster ride since it listed in London in 2005. Second quarter results published last month revealed a pre-tax loss of £1.59m against a profit of £1.33m last year. And shares have fallen from an all-time high of 132.5p last August to almost at the level of their float price.
However, the low share price is a buying opportunity. In recent weeks, Serica appointed two new non-executive directors - Steven Theede, the former chief executive of defunct Russian company Yukos, and Ian Vann, the former head of exploration at BP.
The company has also secured a 100m (£50m) debt facility for funding development in Indonesia and appraisal of the UK North Sea Columbus discovery in the second half. House broker Cazenove says that unlike many of Serica's peers, the shares carry nothing for exploration success, despite the start of what could be a transformational drilling programme in the coming months. Buy at 98.5p.
TV production company RDF Media is the firm behind the BBC documentary which purported to show the monarch storming out of a photo session. Since the incident, RDF's share price has dropped to its lowest level since September last year and both the BBC and ITV have suspended new commissions until the outcome of a BBC investigation, which is expected to conclude next month.
Before the debacle RDF had performed well since listing in May 2005. It is leading the raft of consolidation in the British independent production industry, and has a track record in exploiting the rights to its show formats by selling them internationally. In the last year pre-tax profits grew from £4m to £7m, boosted by acquisitions and organic growth.
The Faking It and Wife Swap maker unveiled a strong roster of new commissions last month, including Chris Tarrant presenting his first gameshow since Who Wants To Bemaire. Although the UK production business may take a short-term hit, RDF should be significantly diversified to mitigate the impact.
The rights arm contributes £21m a year to turnover, while the US production base adds £16m. Following the conclusion of the BBC's investigation demand for RDF's content should gradually pick up again. Shares look cheap at 205.5p - buy.
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