Newspaper and magazine share tips

By This Is Money
Updated: 10:37 EDT, 22 August 2008

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

Share tips: A round up of the week's stocks

FRIDAY

Telegraph:

Cineworld's group revenues for the first half ended a shade up at £137m with operating profits 30% higher at £14.1m. The company has also formed a screen advertising joint venture with Odeon, the benefits of which should start to be felt. The shares yield 9% and while it is covered just 1.4 times, the mid-year payout was increased yesterday. Buy.

John Menzies' chief executive yesterday accepted that newspaper and magazine distribution is now in a position of being forced to manage decline. Half-year revenues were up 10% at £826m, with pre-tax profits some £4m lower at £11.3m. However, the shares have fallen by about 40% in the year to date while the stock's dividend yield of more than 7% is 1.7 times covered. Avoid.

Times:

UK biotechs companies such as Oxford BioMedica and Renovo have seen their share price plummet by almost 90% and Acambis, Protherics and Sinclair Pharma have either been bought or are likely to be soon. ProStrakan's interim results yesterday showed turnover had gone up by 26% to £26.4m and Abstral, is one of several drugs tipped as potential $100m sellers. Buy.

Amlin, a Lloyd's of London insurer and reinsurer, yesterday saw first-half profits fall by 26% to £137m. Amlin's core insurance business has remained strong, with a combined ratio of 67% and business retention rate of 85%. Amlin chief Charles Philipps admits that profitability is likely to come down because of the upheaval in the financial markets. Hold.

SIG, formerly known as Sheffield Insulations Group, has suffered particularly from its exposure to the Irish residential market and reported yesterday that like-for-like sales in Ireland fell by 17.1% in the first half of 2008. Net debt has risen by £211m to £640m after a series of small acquisitions and SIG now looks cheap at yesterday's closing price of £4.87. Buy.

THURSDAY

The Telegraph

H&T's half-year results show a 40% rise in pre-tax profits to £4.55m and the 14% increase in the pledge book to £29.1m. H&T also expects to have 103 stores open by Christmas and with a prospective dividend yield of 3% and on 10 times forecast earnings, you could do worse than pawning an old watch to buy some shares. Buy.

Inkjet maker Xaar has fallen into a nasty downward spiral as the economic downturn leads to falling demand for the big billboards and other advertising in which the company specialises. Xaar's own sales in China, where it has almost 90% of the market, have been squeezed by licensees and overall sales have slipped from £23.4m to £22.5m. Avoid.

The Times

Mecom is the European newspaper group run by David Montgomery, based on the idea of stripping out inefficient practices in order to boost margins. However, Mr Montgomery is unpopular in some countries and so far margins have not advanced. There are also concerns over net debt and worries about the near-term outlook have pushed shares down 16% to 18½p. Avoid.

H&T has decided, for the first time, to start hedging gold two years forward. Pawn service charges were up 19%, retail like-for-like sales rose 14% and earnings per share were 25% ahead. At 177½p, H&T, which carries £34m of debt, sits at eight times 2009 earnings, and given the company's own circumspection, feels about right. Pass.

Shares in Dignity Group, Britain's only quoted undertaker, are not known for moving fast and its 3% advance yesterday was driven by takeover activity elsewhere. Dignity's next special dividend is not due until 2010 and rising costs and a slowing death rate could put pressure on earnings. Yesterday's 740p, or nearly 18 times next year's earnings and yielding less than 2%, is a good point to take profits. Sell.

WEDNESDAY

The Times

It is hard to think of a small-cap stock better suited to uncertain times than Mears Group. It has net cash, sits on a record £1.7bn order book and draws nearly all of its sales from the public sector. Support from its tracker fund entry next month to the FTSE all-share index , gives investors a reason to buy.

Wellstream Holdings, the Tyneside oilfield equipment supplier, is a reasonable bet, according the Times. Yesterday, the £1.1bn company signed a four-year deal to provide the state-backed Petrobras with at least £600m worth of flexible pipes to connect undersea wells with floating production platforms. With the shares having since fallen back from £14 to £11.10 yesterday and next week's first-half figures unlikely to disappoint, that advice holds good. Buy.

Each of Alliance & Leicester's 217,000 private shareholders will play a part in deciding whether to back Santander's £1.33bn A&L bid. At first glance, the offer does not look altogether appealing. A&L shares topped £11 two years ago, and the Spanish bank's bid values A&L at just 335p a share at yesterday's prices. That said, rejecting the deal could be financial suicide. Each shareholder must vote twice - for the court approval and for the extraordinary meeting. Northern Rock's problems show that A&L might be too small and specialist to withstand another financial market shock. Santander is well-capitalised, a stronger proposition and yields 6%. Accept.

TUESDAY

The Times

Woolworths stores generate about £1.7bn of sales, which means that even modest operating margins would be sufficient to generate significant profits. However, any joy must be offset by the failure of previous approaches to takeover the retailer. Any turnaround efforts by the newly appointed chief executive, Steve Johnson will take at least a year to show through. At 7.4p, avoid.

Raymarine, the company behind one of the best brands in nautical navigation, gave warning that first-half profits would miss forecasts. Its shares fell below their issue price for the first time in the four years since flotation. At 132p, Raymarine sits at six times earnings and yields nearly 8%, but carries £82m of net debt. Sell.

The Daily Telegraph

PZ Cussons, best known to UK shoppers as the maker of Imperial Leather and owner of The Sanctuary brand. The group's recent full-year results showed both revenues and pre-tax profits increasing in double digits. The group's stock trades on a forward-earnings multiple of a little under 15 times - a discount to larger groups such as Reckitt Benckiser. Buy

With energy efficiency one of the major drivers of today's economy, the Zenergy reckons its market could soon be worth almost £2bn a year, as industrial groups and energy generators seek to operate as efficiently as possible. While the company is not forecast to be profitable for a few years yet, it is well set to deliver growth. Buy.