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.
Cable & Wireless: There will be better times to buy, according to the Times.
The Daily Telegraph
BT's numbers were not as bad as most analysts had expected after the company's shock profit warning two weeks ago. Pre-tax profits for the second quarter were down 11% to £590m on revenues up 4% to £5.3bn. The low share price, down 15pc after the recent profits warning, reflects fears that BT may be forced to slash its final year dividend.
Investec's 'tight' management did produce a solid set of results. Pre-tax profits fell 11% to £227m for the half, a resilient performance given the 'challenging' markets. For a bank, Investec looks cheap – trading on five times earnings with a 10% yield. But, going into a global recession with large exposures to both Australia and the UK, this is no time to buy. Sell.
Investors Chronicle
Marks & Spencer's drop in sales volumes was disappointing. Like-for-like sales dropped in the first two quarters of 2008-2009 by 5.3% and 6.1% respectively. The company continues to be a target for a take over. Sell.
Barratt Developments shares rallied last week in the build up to the widely anticipated cut in interest rates. But can the help of the UK base rate, now at a 50 year low, help prevent further horrors on the housing markets. Even after the recent bounce, the shares are not worth the risk. Sell.
The Times
The Restaurant Group (TRG) saw like-for-like sales for the 45 weeks to November 9 rise by 2.5%. Consumers are still likely to spend money at weekends and payday but weekends are tough going. The shares, up 3½p at 108p, are trading on a full-year multiple of seven. There will be better times to buy. Avoid.
THURSDAY
The Times
Dimension Data is considerably more resilient than at the time of the 2001 IT downturn. The problem rests with the 60% of DiData's revenues still linked to hardware sales - where margins are low. Thus, although DiData's results were ahead of estimates and its balance sheet boasts a comforting $400m of cash, yesterday's 6% bounce in the shares to 31¼p, or eight times earnings, may be as good as it gets for now. Avoid.
Enrolment in BPP Holding's full-time Graduate Diploma in Law (GDL) – the conversion course that allows nonlaw graduates to switch to law – was up 31% this autumn. Yet at 343½p, or ten times earnings, and yielding 6.7%, BPP appears to be good value, given the strength of its brand, the scope to exploit recently bestowed degree-awarding powers and the undimmed potential for bid interest from an American rival. Hold.
The Daily Telegraph
Land Securities is considered as something of a bellwether for the property sector, so the £1.74bn loss posted for the half-year sent out worrying signals. Land Securities' wide range of customers means the collapse of companies over the next year should not leave it with gaping holes in rental income, but the risks of investing still outweigh the potential gains. Hold.
Amec, which provides consultancy, engineering and project management services to the world's energy, power and process industries, posted a £36m pre-tax loss in 2006. Last year, Amec posted pre-tax profits of £149.1m. This gives a forward multiple of 11.8 times, falling to 8.5 times in 2010. Buy.
WEDNESDAY
The Times
Babcock's shares rallied by nearly 4 per cent after the release of first-half results, which showed that the engineering services group, whose value had fallen by a third since September, continues to perform to plan. Yet at 418¼p, or ten times 2009 earnings, Babcock is good value for a company that can see so far ahead. Buy on weakness.
Playtech, the online gaming software developer and the biggest constituent of AIM, headquartered in the Isle of Man, does the bulk of its software development in Estonia, has a share price in sterling and reports its figures in US dollars. There are two big risk issues - Playtech uses cash that it has raised in the public markets to buy private companies and Toscafund, the underpressure hedge fund that is Playtech's second-biggest shareholder, with 12%, may have to sell. Avoid.
The Daily Telegraph
Engineering services group Babcock International has a history of delivering robust growth from what is a solid business. Its latest figures didn't disappoint with pre-tax profits up 30% at half-time to £50.9m, on a 40% jump in revenues to £940.6m. With a forward price-earnings multiple of 10 times, strong order book and reliable customers, investors should follow his lead. Buy.
Aveva provides software to create models for oil rigs, ships, nuclear power plants and oil and gas refineries. Yesterday's interim update from the software company revealed pre-tax profit climbed 73% to £29.2m on the back of a 32% rise in revenues to £74.8m. But with Dresdner Kleinwort publishing a £16.35 price target on the shares, and house broker RBS stating the shares look undervalued, investors should buy.
TUESDAY
The Times
First-half results from Cable & Wireless (C&W) yesterday revealed that the country continues to trade strongly and operating profits in the six months to September 30 were up by 26% to £257m. C&W boasts a strong balance sheet, a highly incentivised management team and a solid 6.1%dividend yield. However, at 142p, or 15 times current-year earnings, there will be better times to buy. Avoid.
Dignity, the British quoted undertaker, reported that revenues in the year to date are up 9.6% with operating profits ahead 10.5%. With the shares having since fallen back to 609½p, up 36p yesterday, or a more reasonable 14 times 2009 earnings, long-term investors should buy on weakness.
The Daily Telegraph
Inmarsat, the satellite group which provides telecoms services to organisations ranging from aid agencies to the armed forces, yesterday saw its shares rise 6% in a 16.4% rise in third-quarter revenue to $162.5m (£104m). Since floating three-and-a-half years ago, Inmarsat has grown its dividend by an average of 5% annually. Buy.
Majestic Wine's results yesterday showed that profits over the six months to September 29 fell by 25.5% to £5.6m -their lowest since 2005. e do not think that Majestic's business model is bust but the consumer slowdown and increased competition from supermarkets is clearly hurting the company.Hold.
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