Newspaper and magazine share tips
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.
Myleene Klass is a model for Marks and Spencers
The Daily Telegraph
The fact that the world's second-largest bank has taken a 10% take, with option to extend it to 20% gives Aberdeen a huge confidence boost. While Mitsubishi has tie-ups with other funds, the equity stake in this deal means it will make every effort to ensure it succeeds. The deal will give Aberdeen rapid entry into Japan, a market it has long coveted but found difficult to penetrate. Buy.
At a time when others are struggling, a 1.1% all in quarterly like-for-like sales at Halfords stood out as an exceptional performance. The group has also successfully been building on its position by skillfully managing its cost base and driving margins, which has given it confidence to repeat guidance that profits would be in line with forecasts. The outlook is favorable enough, given a 6% dividend yield, existing investors should happily hold on.
The Times
Marks & Spencer capital expenditure is being slashed to £700m this financial year and £400m in the next: overheads are being attacked so that cost growth will slow to between 4% and 5%, against 7% previously. At 227¼p, or seven times current-year earnings, the shares are their cheapest for a decade and should find support from the dividend alone. Hold.
Shares in NWF Group have doubled in seven weeks, but that says more about how far they had fallen than any sudden change in its fortunes. Having invested in new warehouses, NWF is in a position to gain market share. However, with no further update due until February, the shares, at 155p, or a hefty 23 times forward earnings, have run far enough. If you have profits, take them. Sell.
THURSDAY
The Times
On current spot prices, UBS calculates, Lonmin's full-year profits will now be about $127m (£71m), against the annual interest charge of $600m that Xstrata would have had to pay on the debt. Hopes that a new chief executive will rectify Lonmin's operational problems and a low valuation (seven times earnings at £18.13) are enticing. However, there is still a danger of further deterioration. Avoid.
Redhall, the AIM-listed engineering services specialist, has proposed a £18.6m takeover of rival, Chieftain Group. The longer-term lure is the scope Chieftain gives Redhall to consolidate its hold on nuclear engineering in the North West. At 249p, or 16 times this year's earnings pre-Chieftain, tuck away. Hold.
The Daily Telegraph
Shanks operates in the UK, Belgium and Holland, and with all three markets seeing positive signs, results are forecast to be a shade higher than previous expectations. Given the potential for the private equity sector, and the strong management, at 12.7 times earnings multiple seems too low. Despite the recent falls, Questor believes there is good value here. Buy.
Harvey Nash's interim figures were reassuring, given the current climate. The company posted figures that beat most expectations with a 39% increase in revenues, with pre-tax profits moving up to £3.9m. Harvey Nash shares now trade on just three times 2009 earnings and yield a chunky – and relatively safe – 7.5%. Buy.
WEDNESDAY
The Times
Yesterday's full-year trading update from Enterprise Inns revealed that 83% of its 7,700 pubs were seeing earnings growth, helped by food sales. Despite the worst trading period in 20 years, the company is forecast to suffer a decline in earnings of just 3%. Its strong cashflows and 10% yield mean Enterprise is far from a dead investment. Keep holding.
Game Group, the computer games retailer, has proved oblivious to the credit crunch so far. Like-for-like sales were up 22% in the first half, thanks to the arrival of the latest version of Grand Theft Auto, a blockbuster game that has sold more than 1.5m copies. At yesterday's 205p, Game is priced at 13 times this year's earnings, and eight times next. Buy.
The Daily Telegraph
In the context of recent turmoil, interim figures from Harvey Nash yesterday were reassuring. The company posted figures that beat most expectations with a 39% increase in revenues, with pre-tax profits moving up to £3.9m. Harvey Nash shares now trade on just three times 2009 earnings and yield a chunky – and relatively safe – 7.5%. Buy.
VT's shares leapt 18.5p yesterday after a trading update that showed the company continuing to grow its order book in the engineering services arena which now stands at £4.6bn – up £600,000 from the beginning of the year. Given that VT has visibility, growth prospects and momentum, this seems a little harsh and the stock should be due a rerating. Hold.
TUESDAY
The Times
Peter Long, the TUI Travel chief executive, and Manny Fontenla-Novoa, his counterpart at Thomas Cook, whose companies dominate the European package travel market, have seen a surge in bookings following the collapse of XL Leisure. During the summer, Thomas Cook raised British selling prices by 7% on capacity down 10%, while TUI, raised prices by 18% on capacity down 13%. Both are pretty well hedged against fuel and currency volatility. It may be a bumpy ride, but hold.
Like the policies it sells, shares in Homeserve, the provider of domestic emergency services, have provided their purchasers with considerable peace of mind. Policy sales are ahead of last year, although retention rates have dipped, in line with a rise in prices. At £14.44, Homeserve trades at 14 times current-year earnings: reasonable given double-digit earnings growth and continued progress in the United States and France. Hold.
The Daily Telegraph
Compass has become a core holding among many fund managers for its defensive qualities and strong management. Compass is almost two years into its turnaround after years of decline, and much of the hard work is now done. There remains the opportunity to create a market where catering outsourcing has yet to take off. Hold.
Jessops has been giving a helping hand from its bank. Under the deal Jessops' banking facilities have been extended from the end of this year to the end of 2011, and under 'significantly reduced' interest rates. In exchange for HSBC's extension, Jessops will grant the bank warrants over 5% of its share capital. In these markets, and with the structural issues that Jessops faces, we still think that the shares are a sell.
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