Newspaper and magazine share tips

By This Is Money
Updated: 05:45 EDT, 14 May 2008

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

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FRIDAY

The Independent

Few firms were licking their lips over the onset of turmoil in the financial markets, but it meant record summer months for interdealer brokers such as Tullett Prebon There is still plenty to get excited about at Character, which has benefited from its licensed products, including the Dr Who, Scooby Doo and Peppa Pig lines. With conservative forecasts, a rising dividend and Christmas coming, Character ticks all the right boxes for growth investors. There is still lots of potential here. Buy.

Unilever sounds more confident than it has for a long time. There should be more improvement in the pipeline, and for investors looking for stable, low-risk growth, Unilever looks a good long-term bet. Buy.

The Times

Selling non-core assets such as its US laundry business will clearly be slow in the current environment, but at 15 times next year's earnings, it is worth holding on to Unilever adds.

Smith & Nephew's drive to improve margins provides support. But with US rival Stryker launching a US rival to its Birmingham hip resurfacing implant and the discount to S&N's US peers now closed, the shares on 22 times next year's earnings, are up with events. Hold.

Investors Chronicle Media devices supplier Gyrus has experienced rapid growth with a large proportion of its sales driven by PK surgery technology, a less invasive than traditional surgery. Despite exposure to the US dollar and has competition from heavyweights it still has a relatively low rating for medical equipment and is moving manufacturing facilities to Mexico. Buy.

Temporary staff provider Staffline has built up a strong track record since it floated three years ago. It has a solid customer base and good credit controls. In despite of pressure on profit margins and a potentially risky new contract with Pirelli its experienced managing director, Andy Hogarth, introduction of tighter regulations has proved successful in reducing competition. Buying opportunity.

Vane minerals, despite recent easing of Uranium prices and a mixed track record, is up more than 125% on the 8.38p shares it was trading at this time last year. Its explorations are backed from cash flow from a producing mine and it has a low political risk. Buy.

THURSDAY

The Times

Buying Taylor Wimpey now requires faith that the US is near the trough and that UK interest rates will fall. Even at 247p, or seven times next year's earnings and a yield of 6.4%, it seems better to miss out on short-term gains than make that leap. Avoid.

The Independent

Despite the positives in the story, there is little reason to buy the shares at this stage of the housing cycle. Although the US forms only a small part of Taylor Wimpey's sales and landbank, the situation on the other side of the pond will probably get worse before it gets better, and any improvement in the UK market is unlikely before the first quarter of next year. Hold.

Johnson Service said that poor trading in its non-core operations means it will miss forecasts for both 2007 and 2008. With Johnson declining to be drawn on its estimates f r 2008, analysts cut their numbers by as much as 20% and suggested the dividend once the biggest reason to hold the shares could be halved.

The Times

Johnson's problem is debt of £150m which overshadows last night's stock market value of 87 million. And with the divisions earmarked for disposal faring badly, paying down that debt will be slow, bringing the prospect it will have to be renegotiated or fresh equity raised. In Johnson Apparelmaster and Sketchley the company has market-leading positions. But the strain on its balance sheet and an uncertain 2008, mean Johnson, even at less than 5 times next year's earnings, is still best avoided.

Shares

Shares magazine is tipping Braemar Shipping Services, the international provider of broking and consultancy services to the shipping industry. After a couple of calm years it is now seeing shares motoring but they still remain cheap, for now. Predictions suggest that they could be 20% higher this time next year assuming America escapes an economic recession. Buy

The retention of Kate Swan as cheap executive of WH Smith will act as a key short term catalyst. While the possible launch of share buybacks in 2008 should highlight both the firm's cash generation powers and its lowly valuation. Buy.

WEDNESDAY

The Independent

Despite what look like an excellent set of numbers from chip designer Wolfson, the shares fell by close to 9% yesterday. The reason is the weak dollar almost all of Wolfson's revenues are in dollars, but almost all of its costs are in sterling. As a result, the company's margins fell, albeit to a healthy 52.6%. But Wolfson looks to be heading in the right direction. On 17 times forecast 2008 earnings, its shares are far from cheap, but its major customers are still developing their products. For high risk investors yesterday's selling has created a decent buying opportunity. Buy.

Investors in Schroders need to ask themselves two things: to what extent is last quarter's strong performance based on exceptionals, and is the valuation looking stretched? On more than 16.5 times forecast 2008 earnings, the stock is certainly at the top end of its valuation range and on that basis, the sensible advice on Schroders has to be to bank profits.

The Times

Schroders is at a premium to the sector, it would appear to require both continued international growth and unfaltering equity markets. On the view that they are likely to pause for breath, now is a good point to take profits.

IT group Morse may seem cheap on 12.5 times current-year earnings, against its sector's 17 times, and offering a 4.8% dividend yield, but the adverse sentiment that has recently hurt the IT recruitment sector is likely to keep a lid on the IT consultancy sector, too. Avoid .

TUESDAY

The Daily Telegraph

Chloride provides gear that ensures the lights never go out on critical applications. It has won major airport projects in Dubai and Qatar, for instance, while its Indian business has picked up contracts with major players such as IBM, Dell and Microsoft. At home, the company ensures there are no power cuts at Terminal Five and Wembley. Although it looks as if Chloride's shares may be pricey on a fundamental price/earnings ratio of 23 times next year's earnings, the growth potential will continue to underpin them for some time to come. Buy.

The Times

Shares in Chloride, the maker of power protection systems, sit at their highest level in six years. At over 20 times next year's earnings, Chloride looks dear. But with earnings forecast to grow by 20%, and a lag in service revenues providing shelter from any slowdown in product sales, that is reasonable. Hold.

Miner Xstrata is paying a relatively full price for its proposed acquisition of Jubilee Mining. Nickel prices may have fallen from $50,000 a tonne to $31,000 currently, but Jubilee will only create value for shareholders assuming that prices remain above $25,000 in the longer term.

Given that the mid-cycle price of nickel has been $13,000, the purchase of Jubilee is yet another sign of Xstrata's confidence in the commodities 'super cycle'. On 8.5 times next year's earnings, and given its record. Hold.

On measures of both NAV and enterprise value per square foot of space, storage group Lok'n'Store trades at a steep discount to its bigger rivals, which seems harsh. But it is sentiment on the housing market that is likely to remain key. Avoid.