Newspaper and magazine share tips

By This Is Money
Updated: 11:45 EDT, 26 June 2009

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

Birthdays: No cause for celebration for Clinton Cards

Friday

The Times

Paper and packaging group DS Smith has had a poor run in recent weeks. But yesterday's dividend cut, the company's first in a quarter of a century, failed to do any more damage as shares gained more than 10%. Cash conservation is a short-term priority and the dividend cut will save £17m a year. A slimmed-down DS Smith is well positioned to benefit from a recovery. Buy on weakness.

Birthdays is the deal that Clinton Cards would rather forget. The cheap and cheerful greetings card chain, bought by Clinton five years ago for £46m, has been nothing to celebrate. It forced its new owner heavily into debt and never turned a profit. Last month Clinton put its 332 stores into administration. With trading still subdued, and no dividend on offer, pass on Clinton shares.

Investors Chronicle

There is agreement that when a recovery comes in the recruitment sector, it will be temporary jobs that will be in demand. That's bad news for recruiters like Robert Walters which generates 65% of its fees from placing permanent staff. Some City analysts predict Walters will make a loss this year. Management has responded with cost-cutting and reducing the staff headcount. But shares look overvalued. Sell.

Tesco, despite its huge size, continues to generate double-digit profit growth and offers investors security. Despite showing its worst Christmas trading figures since the early 1990s, and losing shoppers to aggressive price-cutter rivals, Tesco remains the undisputed heavyweight champion of the UK grocery business and is making good ground at replicating success overseas. The development of in-store banking will mean more dominance for Tesco. Buy.

Thursday

The Daily Telegraph

Northern Foods shares have been as high as 64p, since Questor recommended them at 51p. These shares are now trading on a March 2010 yield of 8.8%. The company also stuck to its payout which is a sign of the company's management confidence. The company's net debt stood at £260.7m at the end of 2008, they are also moving into new markets. In 2008, the company won a major contract with British Airways. This meant a restructuring of the company, which seems to be working. Northern Foods issued over eight profit warnings from 2000 to 2005 but there have been none since the reorganisation in 2006. Buy

Shares in Templeton Emerging Markets Investment Trust are now up 23% from Questor's last recommendation. There is an expected growth of 6.6% in the East Asia and Pacific area this year, according to the World Bank. Emerging economies will recover faster than the western world - the Templeton fund is a 'core strategic' holding that is leverage to development in the East. Buy.

Shares Magazine

CareTech, which runs accomodation and care for people with learning and physical disabilities, has not yet benefited from the recent market rally. The company is in a growing market and has been quoted on a forward price to earnings (PE) ratio of 11.2 for 2009 and 9.7 for 2010. This 'implies an upside of 25%'.Buy.

EasyJet has fallen out of fashion with investors. EasyJet shares have fallen by 18% in the past month. However, the airline has reported a 1.8% increase in passengers for May. It is the time to buy on share price weakness as EasyJet has a habit of surprising on the upside. Time to buy.

The Independent

Kesa Electricals shares rose 6.75p to 109.5p yesterday. That was despite thhe group, which owns both Comet and Darty of France, has revealed a huge drop in profits. Income was down from £141.3m to only £77m. Punters should be looking for companies performing solidly, with a clear idea of what is going to happen in the next year. Buyers won't get that with Kesa. Avoid.

Bus and train operator Stagecoach had a 12.6% jump in full-year profits. This shows that the company has a very good operational performance. Stagecoach is a great stock and a positive outcome to its fight against the Government should send the shares soaring. Buy.

Avocet Mining, a gold production company, has revealed a 10% drop in pre-tax profits. Investors should be cautious because of the great deal of uncertainty around the company. However, it is in constant production and is profitable. The shares have remained cheap but should improve a great deal if September is good: the company is due to deliver an update on problems in its Malaysian operation. Hold.

The Times

Stagecoach is currently locked in five different disputes with the Department for Transport - it will take at least a year to resolve. In the UK, bus profits rose by 14% to £126m. Stagecoach's operating margins at 15.1% remain the best in its sector. The company have acted swiftly to cut costs to try and improve net debt of £340m. Stagecoach's operating performance has remained constantly better than its peers. However, The Times has recently revealed that Stagecoach paid £1.2bn to secure the South West trains contract, which must undermine that allure. Avoid.

Wednesday

The Times

Firepower: Munitions firm Chemring will not be impacted by a withdrawal from Iraq.

First-half sales at Chemring, the FTSE 250 maker of military flares, decoys and munitions were up 55%, operating profits ahead 64% while earnings per share rose 56%, oh, and the dividend was increased by 40%

Perhaps more reassuring was Chemring's claim that the proposed partial withdrawal of the United States from Iraq will not have any 'material impact' on the company's profitability.

Chemring draws three quarters of its sales from outside the UK, so the boost to yesterday's numbers from weak sterling will not be sustained. But at £20.96, up 97p, or ten times earnings, hold on.

Reported sales at Domino Printing Sciences have risen in each of the past 30 years but yesterday's figures for the six months to April 30 revealed a 1% fall.

Domino's technology is used to stamp sell-by dates on food and pharmaceuticals, but also to code more cyclical products, everything from car parts to building materials. Its sales have proved sensitive to reduced spending on capital equipment and lower factory production volumes.

An above-average forward earnings multiple (nearly 13 times) indicate that, at 244¼p, up 20p, the shares are up with events. Pass.

The Telegraph

Standard Chartered, the bank which is focused on emerging markets, will issues a trading update which Questor expects to be upbeat. The shares were recommended at £12.40 on June 4 and they have fallen by about 7% since then. The fall is roughly in line with falls in major emerging markets since that time. But China's $585bn (£357bn) stimulus package is starting to have some effect in the region - and Asian growth is expected to rebound sooner than in other markets.

The shares are trading on a current-year earnings multiple of 13.2 times, falling to 12.6 in 2010. Questor does not think this is too high considering the growth prospects in its markets. Buy.

Tuesday

The Daily Telegraph

About 75% of Reckitt Benckiser's sales come from products that are number one and two in their category – such as Finish, Cillit Bang and Clearasil. Reckitt's attention to developing these 'powerbrands', coupled with strict cost management, has resulted in net debt falls from £693m to £403m and income growth of 8-10%. Reckitt is a cash generative company with a strong balance sheet and proactive management. With a safe dividend of 3.2%, the shares are a buy.

Shares in industrial property giant Brixton tumbled 30% yesterday after Segro's takeover announcement. It's the latest in a string of setbacks for investors who've seen the shares fall from 597p in 2007 to just 14¼p in March. With pre-tax losses of £768.8m and vacancy rates above 20.3%, Brixton is feeling the pinch. However, shareholders should back the Segro deal for fear of damaging consequences if no deal is struck.

Powerbrand: Cillit Bang is proving a success for Reckitt Benckiser

The Times

Brit Insurance shares rose more than 2% yesterday on the news of a potential tie-up with Chaucer Holdings, its smaller rival. After more than six months of speculation, the Lloyd's of London insurer tabled a conditional all-share offer. But Brit has its work cut out in getting Chaucer's investors onside. A tie-up would create an entity with £2.3bn of premium income. If it fails, shares in Brit should head higher in the short term. Reason enough to hold.

Shares in Kcom have already more than doubled this year which is testimony to last November's turnaround plan – of which a BT tie-up is the latest twist. In the short-term overheads were cut to reduce the strain on a balance sheet that was carrying £180m debt. The long-term objective was to simplify Kcom but the company is only six months into this two-year process. With debt falling, rising profit forecasts and a 5.5% share yield, it's a buy.