Newspaper and magazine share tips

By This Is Money
Updated: 05:07 EDT, 4 October 2007

Each day, This is Money rounds up share tips from newspapers and investment magazines...

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THURSDAY

Shares magazine

Infonic provides patented software that enables corporations and governments to store and retrieve documents and vital information swiftly and efficiently, greatly improving business processes and workflow. A cost-cutting programme, a pair of acquisitions and key customer wins mean Infonic should make its mark in the information management arena and end a lengthy run of annual losses. Buy (5.7p stop loss)

Anglo Pacific Group, a mining finance and investment house, is one of the most successful low-risk mining plays. The £174m company follows a judicious strategy of holding stakes in dozens of companies and banking a regular income flow from its valuable coal royalties Down Under. It is 'as safe as owning shares in a FTSE 100 miner, due to its enormous spread of investments and risk, but considerably cheaper'. On a single-figure price-to-earnings ratio and a big yield, and with rising profits almost guaranteed for several years, the shares look at least 25% too cheap. Buy (132p stop loss)

The Times

Sector consolidation activity will be of little consolation to followers of plant hire specialist Ashtead Group, which, having seen its shares fall by a quarter in three months. It's now just eight times current-year earnings, against fourteen times for its UK peers. Institutional investors have been put off by a strong US dollar (Ashstead is big in the US) and a leveraged balance sheet. It also has a chequered history: a near-collapse in 2003 after its purchase of BET USA. But with none of the company's debt due for refinancing before 2011 and its shares pricing in a US slowdown that has yet to materialise, the shares look too cheap at 112¾p. Buy

The dynamics of Aim-listed ASOS, the online store, have long since become detached from the rest of the clothing sector. Sales were up 80% in the six months to 30 September. Registered users have risen 33% on the year to 1.43 million. The company is also benefiting from the social networking phenomenon: the likes of Facebook and MySpace now comprise its biggest source of traffic. ASOS, a member of The Times Tempus Ten, is up 17% this year, but, at 129½p, a 2008 earnings multiple of 24 times, is not dear given its growth. Hold

Carluccio's opening programme of five outlets a year is also on track. It opened six units during the year to September 23, including a flagship venue in Covent Garden, and will open two more before Christmas in Stratford-upon-Avon and Manchester's Spinningfields development. However, the potential of the concept outside London remains unproved, while the uncertain economic climate means there is a growing likelihood of some sort of consumer belt-tightening. Carluccio's remains an excellent, long-term play, but, at 198½p, more than twice its 2005 issue price, this may be the time to lock in profits.

The Independent

After a long cold summer for the electric components group Premier Farnell, a three-year overhaul is showing signs of flourishing. Yesterday, Premier signalled its intention to expand operations in India. This 'internationalisation' forms part of a three-year re-focusing strategy first announced last October. Other high growth markets it has targeted include China, where it launched Premier Electronics in April, and Eastern Europe. While there are still two-years to go of its strategy Premier is sounding confident it can shake off its legacy of underperformance, and despite the shares rebounding from a two-year low late last month, it might be the right time to plug in. Buy

Lookers received a favourable response yesterday to the announcement of the purchase of rival car dealership Dutton Forshaw from Lloyds TSB Asset finance for £60m. Trouble is, with fears that the ongoing credit crunch will eventually filter into the 'real' economy, would anyone want to buy into a car business? Well, Lookers has, sensibly, diversified through its sizeable parts distribution business - people may ultimately have to buy more parts as their ageing motors go bad. But the company may suffer in the event of a consumer slowdown with sentiment working against the share price. Hold

If consumers are cutting back on discretionary spending such as eating out at restaurants, Carluccio's is certainly not feeling the pinch. Sales over the past year were up 18%. The company is also bullish about coming months with further restaurant openings planned. Carluccio's has won plenty of support for its unique model with restaurants also featuring coffee shops and a wide range of Italian cooking ingredients. But analysts wonder how well the model will translate to areas beyond the south-east. Broker KBC Peel Hunt is nervous about the valuation on 27 times estimated earnings for 2008. If northern customers turn up their noses at the Carluccio's menu, that rating may turn out to be as frothy as the company's best cappuccinos. Hold

WEDNESDAY

The Times

Since floating two years ago, shares in ProStrakan, Britain's second-largest speciality drugs company after Shire, have fallen from 100p to 75p. Yet revenues from its existing range of drugs are, in fact, booming with the cash being used to support a new generation of five drugs that could generate about $100m (£49m) in sales — each - if approved in the US. There is also good reason to have confidence in the management. Harry Stratford, non-executive chairman, was the founder of Shire, while Wilson Totten, his chief executive, was also in the Shire team. The sector is always volatile, so the risk-averse should consider their options carefully. But, as a long-term investment, ProStrakan shares look undervalued. Buy

Postman Pat makes his debut appearance on American television this month, on NBC's Saturday morning block. If American children like tales from Greendale, Entertainment Rights — the owner — could be sitting on a nice new earner. But the art of children's television is to get hits to outweigh misses. The recent £155.8m acquisition of Classic Media allowed it to broaden its portfolio beyond Pat and Basil Brush to give it a series of American properties. The shares are trading on a reasonable 13 times this year's earnings, once all the exceptionals are stripped out. Speculative buy

The worst-kept secret about the future of Findel was confirmed yesterday when the company said that it had decided not to demerge its educational supplies business from its core home shopping division. Some might be disappointed by the missed opportunity to reap rewards from the recent spate of buyouts in the educational sector: however, Findel's strong trading figures show that the company has benefited not only from the summer's poor weather, when people preferred home shopping, but also from its canny acquisition of Kleeneze and the online stores Kitbag and I Want One from Farepak. The shares are trading on a reasonably priced 12.4 times earnings with a yield of 3.2%. Hold

The Independent

The floods of the summer caused chaos at Severn Trent, sending its stock down from 1571p in May to as low as 1244p in August. The group had to evacuate its Mythe water treatment works when the Avon and Severn burst their banks. The price to earnings ratio of 14 times is pretty much in line with the industry, with a strong yield of 5%. If takeover fever returns post-credit crunch, Severn Trent's name will be at the forefront. Potential M&A, the company putting the floods behind it, and its restructuring plans could bring keep the shares buoyant in the medium term. Hold

Shares in Debt Free Direct bounced almost 30% yesterday, having shed 29% on Tuesday after a trading alert from Debtmatters, a close rival. Debtmatters said sustained pressure on individual voluntary arrangement (IVA) fees by banks and other lenders meant the plans were becoming much less profitable to write. The company will next month announce the results of a strategic review, with the promise of lower costs – it is also hinting that acquisitions could follow. With the shares 60% down on the highs of 570p in October. and the potential for growth, both organic and through acquisitions, the price is too low. Buy

Blinkx was spun out of Autonomy and listed on Aim back in May. Despite signing up a slew of high-profile customers for its video search platform, including AOL and Ask.com, the shares have slipped to below 30p compared to a float price of 45p. Yet Blinkx expects its first-half results to beat analysts' forecasts as demand for online video continues to grow 'extremely rapidly'. Another growth avenue is its new video-based advertising system AdHoc, which it hopes will have a similar growth profile to that of Google's dominant AdSense platform. Blinkx's valuation rests on its potential and confidence that it can execute its strategy. It has got off to a great start and a 13% rise in its shares yesterday shows there is appetite for a good news story in UK technology. Buy

TUESDAY

The Times

FirstGroup should soon become the first British bus and train operator in the FTSE 100 since Stagecoach was ejected eight years ago. There are reasons to suggest that the company's $3.4bn (£1.7bn) purchase of school bus and Greyhound-owner Laidlaw should fare well. With First's UK and European businesses continuing to prosper and earnings forecast to grow 20% a year, the shares, at 13.8 times 2009 earnings are still good value. Buy

From AutoParts Azerbaijan to MiningWorld Mongolia, ITE Group has gone where other trade show organisers fear to tread. Yet ITE has proved a safe way to play surging economic growth in the former Soviet Union and in Central Asia. Yesterday's update showed trading to be ahead of expectations, with like-for-like revenues in the second half up 14% – twice the rate in mature European markets. At 169p, ITE sits at 17.4 times 2008 earnings, but with £30m of cash giving it scope to continue buying back shares, pursue bolt-on deals and enter new markets, it is worth holding on. Hold

UK Commercial Property Trust, a fund 75% owned by Resolution, notched up an unenviable first yesterday: its external valuers cut the price of its portfolio, a first for a London-listed vehicle since the real estate downturn began. UKCPT shares fell 3½p to 80½p, a hefty discount to a net asset value per share, which it said will also fall by 3.5% to about 98.5p. That may seem steep, but most agents are still expecting property prices to fall about 10% in coming months. That is reason to avoid, and to reevaluate holdings in more retail-focused property plays. Avoid

The Independent

Amid all the gloom up popped FirstGroup yesterday with a bit of good news. The £175m it planned to raise from shareholders to help finance its £1.8bn purchase of Laidlaw – the company that owns America's Greyhound buses – will not be needed. Trading across the group looks chipper, with the bus business showing healthy growth and improving margins, and the rail operations chugging along happily. FirstGroup is not the most exciting business in the world, but it does what it does well. Buy

A trading statement from Shanks was solid ahead of half-year figures with phase two of its flagship Private Finance Initiative project – the East London Waste Authority – now complete following delays due to supplier insolvency. The substantial businesses in the Netherlands and Belgium are also doing well. With rising landfill taxes starting to bite, its recycling expertise will increasingly be called upon. The credit crunch may have taken the possibility of a bid from a rival. But once things calm down, and given the company's attractive portfolio, that could change. Fundamentally, this company is a solid long-term play. Hold

Holidaybreak yesterday announced the £47.2m acquisition of NST, a provider of group travel to schools and colleges throughout the UK. Using an operation like NST takes a considerable portion of the grief away from harassed education professionals. It's an area that Tories focused on this week. And, from a business standpoint, combining NST with its existing PGL – which focuses more on activity centres than tours and whose visitors have a younger age profile – makes all sorts of sense. The shares are not cheap, and there is a downside risk from a consumer slowdown. But the deal offers scope for the shares to be re-rated. Buy