Newspaper and magazine share tips

By This Is Money
Updated: 08:23 EDT, 29 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.

Savills has used the downturn to poach from the rival DTZ a corporate finance team, according to the Times

Friday

The Daily Telegraph

Yesterday's record interim results from Melrose Resources reported a near 50% increase in daily production to 21m barrels of oil equivalent - largely thanks to its assets in Egypt. Given that analysts reacted by pushing up their earnings estimates for the full year, it was surprising to see the shares fall by around 3% leaving them at a considerable discount to net asset value. Buy.

SMG, owner of Scottish Television, is probably most famous for its creation of the enduring TV detective Taggart. Today it is a shadow of its former self. The newspapers, radio stations and billboards have been sold and the company is valued at just £86m. However, debt has been cut by 90% to £15m, and yesterday the company posted an interim profit of £2.7m versus an £8.6m loss last year. Those looking to make a killing should stay away, but for a modest long term return SMG is looking like an increasingly safe bet. Buy.

The Times

Yesterday's first-half figures from Hunting, the oilfield services specialist, caused shares to fall nearly 6%. The dip in profits was caused by delays in steel deliveries for North Sea contracts that have since unwound and full-year forecasts remain unchanged. Yesterday's dip to 860½p, or about 18 times this year's earnings, a discount to its sector, marks a good point to buy.

While operating profits from Savills's slid by 88% to just £2.5m, those from property services rose 15% to £16.4m. Savills has used the downturn to poach from the rival DTZ a corporate finance team – an area it has long targeted – and identified £25m of cost savings. However, property markets likely to stay tough for the next 12 months, at least, and shares are trading at ten times 2008 earnings.Hold.

Investors Chronicle

Investing in an insurer may look like a questionable strategy at a time when premium rates are falling across the sector, but Amlin looks well placed to continue making decent underwriting profits. However, Amlin's investment portfolio is being hit by grim financial market conditions. The group's half-first year investment result fell 66% year on year to £22.5m. Although, the company is making impressive underwriting profits and shares are rated at less than 1.2 times Numis Securities' full-year tangible assets forecast of 232p. Buy.

Ever since the credit crunch first surfaced last summer, the recruitment sector has been bracing itself for bad news. Although, SThree has its roots as an IT recruitment firm and its exposure to banking is low. Despite its strong financial position and decent dividend, the shares nonetheless look vulnerable at current levels. Sell.

THURSDAY

The Times

Independent News & Media has long defied the problems in the newspaper sector because of its exposure to fast-growing economies such as Ireland, South Africa and Australia. Its valuation of 7.8 times earnings at last night's €1.44, is well below what newspapers fetched three years ago. With no obvious catalyst, a high valuation and weakening underlying economies, there is little reason to buy. Avoid.

At a time when the high street is suffering one of its biggest slowdowns for decades, the internet is continuing to defy gravity. Sales from Asos this year were up 90% and a fortnight ago, Nick Robertson, chief executive of Asos, said the group had taken £1m a day for the first time. However, the stock is not cheap, with a price to earnings ratio of 19.7 times forecast profits, way above the sector. Hold.

The Daily Telegraph

Communisis was born out of the tie-up between Rexam's printing division and boardgame maker Waddington but, in its recent history, the business has hardly provided much fun for its shareholders. At the same time it has been stripping out costs, so that even its declining businesses are building profits, and rebuilding the balance sheet, with debt reduced by two thirds over the first half of the year. Buy.

James Fisher can trace its shipbuilding roots back to the Barrow dockyards of 1847, but the company proved yesterday that it is firmly facing the future. Yesterday's interims saw saw Fisher post a 29% increase in revenues to £114m and a 16% increase in pre-tax profits. Last time Questor looked at James Fisher, we tipped them as a buy at 448p. With most brokers now holding price targets of at least 700p, it is a recommendation we are happy to repeat. Buy.

Shares Magazine

Polo Resources, the coal miner with assets in Mongolia and investments in two Aim-quoted rivals, has seen its share fall 75% since an offer for rival coal group GCM Resources was rejected in June. However, a recovery is due as it brings its first mine into production, provides clarity on coal resources and finds buyers in Asia. Buy.

RWS Holdings, the world's leading patent translation company, has one of the best earnings forecast profiles on Aim. The firm offers a strong track record, highly defensive characteristics, plenty of cash and cheap acquisitions, all of which point to further earnings forecast upgrades. Brokers Arbuthnot, Numis and WH Ireland carry an average price target of 450p, for 24% upside in the stock. Buy.

WEDNESDAY

The Times

The conflict between Russia and Georgia - together with decreasing oil prices - has hit Dragon Oil's share price in the past few months. The oil explorer transports about 20% of its oil in a pipeline that runs through Georgia. The company reported a 35% rise in first-half operating profits and is producing close to 40,000 barrels of oil a day, about a third more than at the same time last year. Even though oil is trading well below its $147 peak this year, Dragon Oil looks like a good bet for the next few years. Buy.

Spectris, the £1bn maker of precision instrumentation and controls, yesterday announced better than expected organic growth of 6% in all regions. Highly cash-generative, with gearing of just 17%, Spectris has invested its money sensibly but cautiously, with a range of small acquisitions. However, its current share price - up 28% since July - does not represent a bargain. Hold.

The Telegraph

Bunzel boss, Mike Roney, loves to shop. They have acquired dozen companies in Brazil, Germany and Spain have been acquired for a combined £315m, helping Bunzl - which supplies products ranging from plastic bags to medical syringes - to lift revenues nearly 14% in the first half of this year. After hitting a high of 749p in May, Bunzl's share price fell as low as 622p last month, but now looks to be back on the growth track. Buy.

Cairn Energy, the oil exploration group, has been granted licences for six blocks in Greenland equivalent to the size of 250 in the North Sea. The risks are clear. Cairn has been a beneficiary of the high oil price and its small, producing fields are already in decline. However, if you are looking for a stock that will move independently of the world's economic woes, then Cairn it is. Buy