Newspaper and magazine share tips

By This Is Money
Updated: 09:00 EDT, 25 January 2008

Each week we round up share tips from national newspapers and investment magazines. For the Mail on Sunday's 2008 stock picks, see the Midas column

FRIDAY

The Times

Lonmin reported a below-forecast 19% drop in first-quarter output yesterday, on the same day that platinum hit a record high illustrating just how badly the world's third-largest producer of the precious metal has positioned itself in a booming market. Lonmin's predicament has been a persistent inability to meet production targets. Lonmin remains a possible takeover target - the last confirmed approach was two years ago - but predators appear thin on the ground. Avoid.

Shares in Misys - down nearly one third in two months - may have a profit warning priced in, but its management is clearly in no mood to deliver one. Misys's recent tie-up with Digital China, which opens up a market of mid-sized Chinese banks, should help maintain the push into territories so far protected from the credit crunch. The company is managing the rollout of BankFusion, and its shares, at 12 times 2008 earnings, still have scope to disappoint. Sell.

The Daily Telegraph

It was steady as she goes yesterday for Cable & Wireless. The company confirmed it expects to hit the full-year underlying earnings target of £585m-£610m it set in November when it reports figures in March. However, there was no reference to recent concerns regarding the £2bn pension fund in C&W's statement. Trading on 24 times forecast earnings and yielding a prospective 4.5% there is no reason to jump ship at this point. Hold.

Few companies in the property sector have spent the past couple of years degearing their businesses and effectively hoarding money to spend in sight of a downturn, after the past six months of turmoil, Helical Bar appears to be one of the winners. Its dividend yield, at just 1%, is low. Buy.

Investors Chronicle

After a decade of healthy underwriting conditions the insurance market is softening, but as conditions weaken investor's sentiments towards insurers, like Royal & Sun Alliance, could suffer. The personal and consumer insurer is less profitable than its Lloyd's peers and the dividend yield on RSA's shares aren't especially inviting, as one of the most expensive in the sector. Sell.

Imagination Technologies designs microprocessors for some of the world's best-known consumer electronics brands, but with fewer licensing deals around it looks as if times have taken a turn for the worst. The company has been hit by slow growth in the UK digital radio market and sales of consumer electronics devices are under pressure. Despite being one of the key suppliers to Apple's iPhone, it isn't clear if Imagination can hold its own in a deteriorating market. Sell.

THURSDAY

The Times

Tullow Oil conceded in yesterday's year-end trading update that supply disruptions to two of its major exploration projects were caused by civil unrest in Kenya. However, Tullow confirmed its wider exploration programme remained on track. Its 37% stake in a project in Ghana's offshore means its share could be worth around 400m barrels. Hold.

Britain's biggest environmental consultancy, the RPS Group, produced another round of profit upgrades from its latest trading statement yesterday. The company has announced a growth in profits every year since 1991 but RPS's recent share performance, down a third in less than three months, tells another story. At 16 times 2008 forecasts RPS is still more expensive than the wider support services sector. Buy on weakness.

The Daily Telegraph

Prudential already has a fast growing Asian business but it could be about to go for turbo-speed by striking up a partnership with a Chinese insurance group. The UK insurer's shares initially jumped yesterday on speculation that Ping An, China's second biggest insurer, might take a £7bn stake in the British group. Buy.

Great Portland Estates may not have escaped the fall in property prices, but the value of its assets has outperformed the wider market. The niche West End and Central London developer likes to buy buildings in prime locations with low rents. The company then refurbishes the property and raises rents. However, since last April GPE has lost 36% of its value, which sounds like a lot but is a lot less than many other real estate investment trusts. Those wishing to capitalise on a bounce in property stocks can find better value elsewhere. Hold.

Shares Magazine

Kesa Electricals' share price bounced last week even though Friday's trading update for the year, which ends on the 31st of this month, was hardly packed with good news. Current discussions to sell its French furniture business could be precursor of a juicy cash return, topping up an already plump dividend yield. Buy.

Anite, which provides IT solutions to the telecom and travel industries, could see its shares benefit from break up speculation and consolidation in the local government IT services area. Chief executive Steve Rowley arrived in November 2003 and had the job of cleaning up the previous regime, which had seen the Slough firm spend around £300m in over 30 acquisitions in a six-month period. Its stock looks undervalued if the management start the hoped for breakup. Buy.

WEDNESDAY

The Times

Pearson, the publisher of school textbooks and of the Financial Times, showed that the urge for self-improvement has not dimmed from its year-end trading statement yesterday. Penguin and the FT provide only a minority of group profits; its world-leading education business is set to report £405million in income when results are issued on March 3. It is important to note that education remains a long-term growth business but the company's price/earnings ratio takes into account much of that potential. Pearson's dividend yield and position as one of the media sector's more defensive stocks give reason to hold on.

Wm Morrison's £18m advertising campaign, fronted by Lulu, Alan Hansen and Denise van Outen, appears to be have been money well spent. Full-year pre-tax profit forecasts were raised by 10% to about £580m suggesting that you didn't need to have a big internet operation to succeed in retail this Christmas. The shares trade at 19 times 2009 earnings – against 14 times for Tesco – and appear to have largely priced in near-term recovery. Hold.

The Daily Telegraph

The Bradford-based supermarket, Wm Morrison, has reported Christmas sales figures leagues ahead of its rivals. Like-for-like sales at the chain, excluding fuel, rose by 9.5%. The company's fundamentals are also strong; Morrison owns 92% of its property freeholds which are valued at an estimated £7bn-8bn. The shares, closing yesterday up more than 10p, are worth picking up in a difficult market. Buy.

Since GW Pharmaceuticals floated in 2001, promising to revolutionise the treatments of pain relief for multiple sclerosis and cancer sufferers but there has been a lot of smoke but very little fire. Last year the company's share price fell by 30% after it had to pull a late-stage trial of Sativex, when the regulator claimed that GW's data did not prove that it helped control the shaking suffered by sufferers of multiple sclerosis. However it was encouraging to see in yesterday's results that GW had a cash balance of £21m, enough to keep it going for several years. GW is still making a loss, but according to the Daily Telegraph it is still worth the risk. Buy.

TUESDAY

The Times

Despite a difficult year in 2007 for Corin's its flagship product, Cormet the metal hip implant, won approval from the US Food & Drug Administration and signed a deal with Stryker, one of America's biggest medical devices makers. The deal saw the company's shares surge to 87%, a record high. With scope for plenty of growth and now trading at 19 times 2008 forecasts, the company's shares are reasonably valued. Hold.

Woseley was the first British industrial company in Britain to say that the American housing market had yet to feel the full force of the sub-prime mortgage fallout. The United States, which accounts for half of Woseley's sales, remains plagued by high levels of unsold inventory. With a debt of about £2.5bn and the risk that Europe has considerable scope to get worse suggests that at 11 times next year's earnings, the shares are still best avoided.

The Daily Telegraph

The home improvement and repair market is feeling the effects of higher interest rates and the credit crunch has taken a hold of consumer spending, particularly in the UK where Wolseley estimates a 30% reduction in mortgage capacity. The bad news triggered an 11% drop in the share price. No one know how deep the global economic slowdown will go, but the worst case scenario was priced in last autumn with the company's shares at 800p, according to Questor. However Wolseley has broad international reach and the ability to snatch market share when times are bad. Hold

Amid the carnage and blood-red screens yesterday there were some surprising companies that stood out. Workspace, the provider of commercial space for small to medium-sized enterprises in London, quietly retained its poise. The occupancy level is running at about 89% and the credit crunch does not appear to have hit its more than 4,000 clients across London. It's a risk but definitely worth looking at.