Newspaper and magazine share tips

By This Is Money
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Every day we round up share tips from national newspapers and investment magazines - see all this week's recommendations and don't miss our Midas column

Newspaper's

FRIDAY

The Times

A second profit warning in four months from the owner of the Currys and PC World chains gives measure of the task facing John Browett, the chief executive since December, who is scheduled to deliver the first phase of his business review next month.

The underlying sales picture is one of steady decline that set in long before the malaise of the new year, down 1% for the six months to April. DSG, down 5p to 59p, has fallen from a high of 220p in 18 months.

Investors worried about a worsening retail climate should stay clear. The shares may be off last year's high of 412p but they plumbed 243p in the post-Christmas jitters. Judging by other retailers' trading, those jitters may return. Avoid.

If homeowners are cutting back on TVs, then a new car is unlikely to be high on the shopping list. At 409p Inchcape, the car dealer, is off from last summer's 593p high, but the rise from January's low of 326p may now seem overdone. Take profits.

Silverjet's takeover discussions might have ignited the business class airline's shares yesterday but investors tempted to jump on board should have their radar on events of the past few months.

Last week Silverjet was to report its first monthly profit but admitted it failed to break even. Billionaire brothers David and Simon Reuben loaned Luton-based Silverjet £10m before Christmas but when the opportunity came this year to convert their loan to equity they declined.

Silverjet shares ended yesterday up 5 p to 21p. Investors still on board may want to head for the exit doors now and cut their losses. Avoid.

The Daily Telegraph

DSG International, the electricals retailer that owns the Curry's and PC World chains, released another profits warning yesterday. DSGi said pre-tax profit for the current year would be between £200m and £210m - well below the £220m that analysts were predicting. But following the warning, many in the City now believe things can only get worse for DSGi.

Normally we would consider buying the shares at such depressed levels. The stock trades on just 7.3 times 2008 earnings, rising to 7.8 times 2009. However, there are huge structural issues affecting DSGi. Sell.

Trading figures released yesterday by Thomas Cook suggest the darkening clouds hanging over the British consumer have done little to quench his thirst for a holiday.While leisure industry stocks have slumped, Thomas Cook has bucked the trend, seeing its share price rise 6% since the beginning of the year.

The company remains consumer facing and while many people will insist on their summer holiday, it will suffer with a recession. Hold off for now to see which way the weather blows. Hold

Investors Chronicle

After ITV downgraded their earnings forecast for 2008 to 4.2p per share, USB's media analyst suggested selling shares their shares in the commercial television operator. It's a damning sign when then analysts at a company's own stockbroker suggest selling their client's shares.

Despite the reputation of Michael Grade, executive chairman of ITV, the group has suffered from a fall in advertising spending and unrealistic growth targets. If British Sky Broadcasting (BSkyB) decide to cut its 17.5% stake in ITV down to 7.5% its share price will come under further pressure. Sell.

Chesnara is one of the few companies in the financial sector that has not seen its share price crumple since the start of the credit crunch. Despite a lack of acquisitions in 2007 it has an attractive dividend yield and little exposure to equity markets at a low cost base. Buy.

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Newspaper graphic and pen

THURSDAY

The Times

After this week's sell-off in the housebuilding sector, investors could be forgiven for thinking that value opportunities may just be emerging for buyers. New research on housebuilding out today from Shore Capital brokers forecasts price falls on average in the new homes sector of 7.5% this year and next, reversing the new-build price increases of the past two years.

Shares in Persimmon, Britain's most valuable housebuilder, rose 3p yesterday to 690p, but have fallen by about 80p this month. Persimmon has gearing of about 31%, down from 78% two years ago, when it completed its £643m acquisition of Westbury.

Barratt Developments is still digesting last year's £2.2bn acquisition of Wilson Bowden. Gearing is down, but is still nearly 60%. Of the £1.7bn of debt, up to £700m needs refinancing by April 2009.

At 374¼p, Barratt's shares are at a five-year low. But with the cost to all companies of raising new equity nearing the cost of raising new debt, investors tempted to buy into Barratt's yield of nearly 10% should price in the risk of Barratt attempting an equity issue or a convertible bond to refinance itself. Hold

The minority of private investors left in Dobbies Garden Centres may be regretting not having accepted Tesco's offer of £15 a share last summer. Underlying pretax profits fell 11.7% to £3.8m.

With property values off at least 20% from last spring and little hope for short-term sales growth, small investors risk a long wait for better returns. Dobbies shares, off 62½p yesterday to £12.50, are up from £11.50 last spring. Harvest profits.

The Daily Telegraph

Eurasian Natural Resources may be the biggest FTSE 100 company that no one has ever heard of, but yesterday it was shouting from the rooftops. The company posted a 36% jump in profits to $1.32bn, on revenues that leapt 26% to $4.11bn on the back of increased production and soaring metals prices.

The company pays no dividend - although it has pledged a payout in the current year - and is valued fairly compared with its rivals. Given the uncertainty and the recent run up, Questor is reluctant to encourage investors to buy in now.Avoid.

Finally, a ray of sunshine for Clipper Windpower, the Aim-listed supplier to the alternative energy industry that has been frustrated, if not beset, by supply problems. Shares in the US-based maker of wind turbines have been on something of a roller-coaster ride in the past year, peaking above 900p late last May only to plummet to less than 480p within four months, before finishing the year above 700p.

Risks remain, but trading at 22 times 2009 forward earnings against a sector average of 24 times, the shares look appealing. Buy.

Shares Magazine

Coal prices are rocketing and few companies can boast world class reserves like Coal of Africa. Despite the uncertainty, and the chance of a few hiccups along the way, the prospects look bright for the company.

It may have looked like 2007 was plain sailing for the provider of social and personal care services for the elderly and disabled, but 2008 has been anything but, so far at least.

Southern Cross Healthcare was the victim of panic selling, which seems to have now subsided after a reassuring trading statement in February. Long-term demographics favour this well-positioned firm. Buy

WEDNESDAY

The Telegraph

Hopes of Severn Trent being on the receiving end of takeover activity pushed the shares up to a high of 1580p at the end of December. At 1445p, Severn Trent shares are now trading just 20p off the price they traded at in August when the company first admitted that it faced a criminal prosecution.

If investors are willing to bet that Severn Trent's total fines will not be far over £100m the shares may now seem good value. Buy.

Concerns about the restaurants and pubs business at Whitbread have hit the share price, but a focus on operating margins should limit any decline. In the short term the stock could continue to suffer on consumer confidence concerns, but there is already value here. Book in says the Telegraph. Buy

On Numis's raised forecasts of $63.8m pre-tax profits for the coming year, the multiple is 17 times and yield 2.5%. Given the current growth rates, 888 is worth a small flutter. Buy says the Telegraph.

The Times

Online gamer 888's management believes liability for a final settlement with the American authorities is somewhere between $40m and $100m, which is digestible with the company's strong cash flow. 888 shares, up 3¼p to 150p, compare with the rumoured 135p offer from Ladbrokes and are up from last year's low of 104¼p. The yield is a lowly 2.5% but strong cashflow justifies the multiple of 16 times 2008 holdings. Hold on says the Times.

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