Newspaper and magazine share tips

By This Is Money
Updated: 08:21 EDT, 21 November 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.

Tips: The Times thinks it is best to avoid Woolworth's shares.

The Times

First-half figures yesterday from Halfords revealed cycling as one of the few corners of retail that is defying the downturn. The chain's like-for-like sales were 1.1% lower overall, but ahead in leisure, the category in which cycling sits. At 240½p, or eight times earnings, and yielding 6.3%, the shares are one of retail's safer rides. Hold.

On the face of it, yesterday's trading update from Young's is evidence of why investors should steer clear of the pub sector. Although the London-based operator's first-half figures were perfectly respectable, with underlying profits up 9.4% and adjusted earnings per share 0.2% better. Although things are likely to get worse before they get better, Young's, at 357½p, or 14 times earnings, remains a long-term hold.

The Daily Telegraph

Yesterday's first-half pre-tax profits from Mothercare had risen by 124.6p% to £13.7m. The retailer increased its interim dividend by 24% – a measure of its confidence. The stock has a healthy 5% yield. The company is partially sheiled from the economic slump by mother nature, as it insures that Mothercare will get a steady flow of custom throughout the year, recession or not. Buy.

Spread-betting company IG Group delivered a largely upbeat trading statement yesterday, forecasting a 21% increase in first-half pre-tax profits to £58m, after volatile stock markets encouraged customers to place more bets. Revenues, meanwhile, are projected to climb 45% to £125m. IG Group has a growth story to tell, but bad debts could continue to be an issue. Hold.

Investors Chronicle

United Utilities shares are highly rated for a water utility. Regulators are set to get tough and its dividend is growing slowly, at best. Despite its non-regulated water business performing well it may be times to invest in shares from a company less highly rated within the water sector. Sell.

Green Dragon Gas, the coal-bed methane producer, is likely to be in demand in the next few years. China' usage of natural gas energy is just 3% wants to increase its proportion to 8% by 2010. But its shares are lovely rated. The large gap looks unjustified and should narrow as the company continues to build its reserves and revenue. Buy.

THURSDAY

The Times

Care UK's, the nursing home operator and domiciliary care specialist, shares have fallen by a third since the start of October. There is a long term worry that Care UK's contracts may be affected by the first wave of independent treatment centres. The more immediate worry is that strains on local authority finances put pressure on fees. Pass.

It might come as little surprise that Woolworths may receive as little as £1 for its debt-burdened high street chain. Insiders say that the banks, now inundated by end-of-year audits of their loan portfolios, fear that Christmas will be so dire they want to realise whatever they can now. Avoid.

The Daily Telegraph

Construction products supplier SIG warned yesterday that it was not immune to the collapse of the housing market as it revealed that full-year profits are set to be at the lower end of analysts' estimates of between £140m-£163m. With a 16% yield, the shares look good value, but there are fears a dividend cut could be on the cards. Sell.

Care UK, the health and social care services provider, has long been seen as a defensive share. Its latest results were in line with expectations, showing a 20% rise in annual operating profits, coming at £36.4m. The final dividend has just been increased by 11% to 3.1p, payable on February 18. That makes it an attractive proposition considering the shares are currently trading at 7.4 times forecast earnings. Buy.

Shares Magazine

The impact of the recession and credit crunch is about to take its toll on tour operators. TUI Travel continues to reassure the market over trading conditions but a 10% lift in its share price last week could be the last for a while. Sell.

Diploma, the service company supplying medical products and instruments, is well-run, well-financed and well positioned within a strong defensive niche market. The shares have almost halved in the past year but now look too cheap with 20% plus upside. Buy.

WEDNESDAY

The Telegraph

Wolseley, closed at 293p, down from 470p, yesterday. The sharp fall came after the plumbing a building supplies group announced more than 2,380 job cuts and 200 branch closures. Although the company is now trading at seven times earnings after a 61% fall in its share price during 2008, but too much uncertainty remains. Avoid.

Premier Foods is making all the right choices about reducing debt at the moment, considering everything from business disposals to equity-raising and debt refinancing. Despite this, the company's debt is nine times its current market capitalization. Avoid.

The Times

Yesterday's first-half figures from Burberry revealed that like-for-like retail revenues, having been up 3% in the six months to September 30. At 175p, the shares sit a six times current-year earnings and yield 6.9%, which is cheap for a company with a strong balance sheet and emerging-market growth.

Shares in the Big Yellow Group rose by 6% yesterday following the news that the company, for the first time in four years, would not be paying its dividend in favor of spending the cash on new store openings. However, with a net debt of £296m and trading likely to worsen, its shares are best avoided.

TUESDAY

The Times

Cranswick, the Yorkshire producer of cured meats and sausages , revealed that sales were up 9%, earnings per share were ahead 8% and the interim dividend was raised in line. The problem for investors is that profits are not growing particularly fast and the shares, down 20p at 580p, or 10.5 times 2009 earnings, are not especially cheap. Avoid.

Diploma, the small-cap distributor that demonstrated such confidence, should be rewarded by one of the biggest share-price gains in the FTSE all-share index yesterday – up more than 13%. Even after yesterday's jump to 129p, Diploma, with £16 million of net cash, still sits at less than eight times earnings. Hold.

The Daily Telegraph

Bodycote International's shares lost more than a fifth of their value yesterday as the engineer warned of a drop in profits and halved its payment to shareholders from the sale of its testing business. Bodycote is yielding 8%, but the sector is going through a downturn so it will take time for the value to emerge. Hold.

ASOS defied the credit crunch once again by unveiling a 107% leap in revenues yesterday. Deals with labels such as Miss Sixty and French Connection have also boosted profits as Asos pays wholesale prices to the high street chains. Buy.