Newspaper and magazine share tips

By This Is Money
Updated: 13:10 EDT, 14 September 2007

Each day, This is Money compiles a summary of some of the share tips from national newspapers and investing magazines...

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FRIDAY

Investors Chronicle

Lloyds TSB may have a fat dividend yeild and evidence of improving credit quality but it is focused on low-growth UK retail banking and its lending margins are under pressure. It is also more exposed to pricier wholesale funding than main rivals and its shares are highly rated compared with peers. Sell

Talvivaara is developing an innovative low-cost mining methods for extracting nickel from ore called bioheap leaching. It also has the funds to complete its projects and is an attractive acquisition target. The downside is a global nickel price that is down recently. Buy

The Times

Home Retail Group does what it says on the tin: shopping for the home. There was a half-year trading update yesterday from the owner of the DIY chain Homebase and Argos, the catalogue retailer. The shares, up 10p to 410¾p yesterday, trade at a 10% discount to the average of its peers and is nearly three points off its June peak of 15 times forward earnings. That fall may be justified given the wider fears in retail, but with Homebase's costs under control and Argos able to attract the big spenders, retail bears may want to keep Home Retail as a hold.

Half-year figures out yesterday from Charter showed just how far one of Britain's oldest engineers has come in four years, when only a £40m heavily discounted rescue rights issue saved it from extinction. Revenues for the first half rose 10.7% to £691.5m, triggering a 32.3% surge in pretax profits to £92.1m and causing analysts to mark up their expectations for the full year. Its welding materials and kit supply the oil and gas, shipbuilding and construction industries from America to India and, more recently, China. With no signs yet of world GDP faltering, Charter is nicely positioned to piggy-back global economic growth. Hold

The Daily Telegraph

Insulation is big business. SIG, formerly Sheffield Insulation Group, has just seen its first-half turnover burst through the £1bn mark for the first time - driven mostly by the need to fill wall and roof cavities. The company, which dates back to 1956 and has been quoted since 1989, has seen its shares perform strongly over the past five years, having risen sevenfold since January 2003. Thanks to the recent cooling off, it now trades on a forward 2008 price/earnings multiple of 15.7. The shares may blip down further, but this only makes for a better buying opportunity. Buy

Dignity, the funeral services operator, has proved that it is worth betting on the fact that 'nothing is certain but death and taxes'. Since floating in April 2004 at 230p, the shares have soared and yesterday's solid interim results saw the stock close at 725p. Questor has always been convinced that the shares are worth clinging on to and in March 2006 rated the shares a buy. But at these levels, where the stock is trading on a price/earnings ratio of 28 times 2007 estimates, the shares look expensive. However, brave investors may well be tempted to bury some of these shares away for another day. Hold

THURSDAY

Shares magazine

Advanced Medical Solutions targets a specialised area of the wounds-treatment market, worth £7.5bn globally last year. The NHS currently spends £110m a year on advanced wounds dressings, and AMS has already designed a range of world-beating products. Its profits are growing fast and should continue to do so for many years. It will probably be snapped up by a larger rival. Buy.

Despite Serco's excellent earnings visibility and a ten-year historic growth trend of 18%, the recent market wobble has seen shares fall back to 514&14;p. This looks like a buying opportunity, especially as Serco's prospective price/earnings ratio of just over 19 for 2008 stands at a discount to peers such as Capita (24) and Xchanging (21). Buy.

Daily Telegraph

The cherry truffle is back and with it the dawn of a new era for Thorntons, just don't call it a recovery. The shares are pricing in a full recovery and a potential bid, which seems unlikely in the current credit climate and amid fears of a downturn on the high street. They are trading on just over 20 times forecast earnings, which seems optimistic at best. Sell.

This column has always been a fan of engineering group Charter. Welding and industrial gases may lie at the les sexy end on the business scale, but it's hard to look at a share price graph like the one on the right without going weak at the knees. Even after the impressive run-up recently, there is still upside potential in the shares. The run up won't be quite so steep, but after Charter's recent performance, the Telegraph's Questor can't help but continue to back it.

The Independent agrees, while the Times says Hold.

Independent

Thanks to global consolidation that culminated in the takeover of Hanson earlier this year, Aim-listed Ennstone is now the last publicly-owned aggregates group left in the UK. The stock trades at over 15 times forecast 2008 earnings, a rich valuation given the ongoing dollar weakness and uncertainty over its US operations.

But the business is making good progress in restructuring, recently raised £50m of new capital and prices are working in its favour. As an asset-based business there is room for upgrades to the valuation. Worth a punt.

The Times

Tullow Oil started out making a success of breathing new life into North Sea oil wells that BP deemed past their sell-by date. Now it can transfer skills learnt in the harshest of environments to massive new discoveries in Ghana, Uganda and the French Caribbean. Tullow shares have doubled to 560p over the past year but if management can prove their mettle in new waters, the shares should rise higher still, making Tullow a buy for those looking for a racier alternative to the oil majors.

WEDNESDAY

Independent

Derwent London, which leases office space in central London and that was formed earlier this year when Derwent Valley Holdings merged with London Merchant Securities, should be able to protect itself during the downturn.

It has little residential or retail exposure, the weakening property market should provide opportunities for the company, and its focus on corporate clients as tenants is far less cyclical. With the shares looking cheap, at 14% discount to the June net asse value, strong performance so far this year and good prospects, this looks like one to buy and stick in the back pocket for a while. Buy.

Daily Telegraph

Chip designer ARC looks in good shape to turn a profit next year after an agreement revealed yesterday with the technology giant Intel that could bolster ARC's royalty by £3m a year by 2010. ARC trades on 2.3 times 2007 sales forecasts – and 1.8 times 2008 estimates – its closest peer, ARM, is valued at 6.3 times 2007 revenue projections. But with the Intel deal in the bag, ARC's recent recovery does not appear to be another false dawn. Buy.

Cairn Energy took a major step forward yesterday when the Indian government awarded the company 'rights of use' to the land on which it will build a pipeline to carry the oil from the field to the port. The most bullish of analysts also expect the company to revise upwards the overall production from the Rajasthan fields. With this in mind, there is still significant upside to the shares, and investors who welcome the rollercoaster ride that comes with oil exploration should buy.

It's not yet clear whether Carphone Warehouse will sell iPhone but, trading on 17 times forecast earnings, falling to 12.4 times for 2009, and with rumours of US giant Best Buy sniffing around likely to underpin the price, the shares are still attractive for the long term. Buy says the Telegraph.

TUESDAY

The Independent

First-half results from Bovis Homes yesterday were once again at the top end of forecasts, But Bovis does not have the right exposure to set the pulse racing. It does not operate in London or the South East, where house price inflation has been highest. The shares are supported by a 5.4% dividend yield and for low risk income-seekers the stock is worth backing. But it looks like the sector consolidation could take a breather and even if the 8.4 times forecast 2008 earnings Bovis trades at looks good value, the chances of the market re-rating the stock any time soon look slim. Hold

The correction caused by woes in the credit markets has been a boon for inter-dealer brokers like Tullett Prebon, and the phones have been ringing off the hook – as proved by record trading volumes in June, July and August. Tullett shares trade on a forward multiple of 12.5 times forecast 2008 earnings, a significant discount to its nearest UK peer, ICAP. Operating margins of about 18% should be maintainable. This is a quality business and a good hedge against weaker markets – which every portfolio should have. Buy

Yesterday's results from Haike Chemicals are worth a second glance despite the shares falling 35% since May. Haike is a speciality chemicals and petrochemicals groups based in Shandong province in northern China. It listed on Aim in February and debut interim results were in line with forecasts. This stock is only for investors who can afford to take huge risk with their money – but if Haike gets the rub of the green and hits its full-year forecasts the shares will begin to look ludicrously cheap. A very risky buy

The Daily Telegraph

Concerns over the spending power of UK consumers and the threat of higher rates has weighed heavily on practically every house-building stock. Bovis Homes has suffered more than most. But the company suggested yesterday there were reasons to dare to hope that the worst could be over. The management of Bovis is generally well-regarded and its land bank is reckoned to be of the highest quality. Those willing to dip their toes back into UK bricks and mortar could do worse than Bovis and investors already in the stock should hold, but for the risk averse, the shares are best avoided. Avoid

It's not often that a company posts an 89% surge in interim pre-tax profits, and sees its share price fall. But Chaucer Holdings, one of the largest underwriters in Lloyd's of London, managed it. The company insures a diverse range of risks from car crashes to hurricanes. Although the lack of hurricane activity is leading to a drop in premiums in 2008, should it continue in this fashion, Chaucer could be on course to report bumper full-year results. It is trading on a yield of 3.1% but has an estimated yield of 4.6% for 2007. Buy