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.
WEDNESDAY
The Times
The price of gold has risen by one third over the past two years, but share in Avocent Mining have gone in the opposite direction. However, the combination of falling costs and sharply rising production and Avocent's steep discount to its peers after past disappointments makes the shares a buy.
Yesterday's agreement between Gem Diamonds and Tiffany & Co, under which the fully listed miner will supply the retailer's gem sourcing and polishing. Gem's balance sheet provides the prospect of maiden dividends or share buy backs, hold on at 210.75p.
TUESDAY
The Times
Arriva secured the Cross Country rail franchise two year ago and has been rewarded with sharp gains in its share price. But the deal that at the time was seen as giving Arriva critical mass in trains — its fortunes were previously more hitched to buses — has instead proved a drag on short-term profitability.
At 485p, or ten times next year's earnings, and yielding 5.5%, the shares are up with events. Pass.
Rock-bottom interest rates may be good for music sales but they are bad for music publishers. Or at least for Chrysalis, the small-cap company with a catalogue that stretches from Paul Anka to Jay-Z. When it agreed to a bank securitisation deal this decade, it also entered into a 'cap-and-collar' hedging arrangement to protect itself against future rises in interest rates.
In the longer term, Chrysalis, which has rejected EMI in the past, is a takeover target itself, albeit at a time that is likely to suit founder and chairman Chris Wright, who retains 30%. However, at 102p, up 70% since August, there should be better times to buy.
It will not be until early next year - says the Times - that the world's biggest oil and gas producers provide a clear steer on their capital spending plans for 2010.
But that did not stop Wood Group, the Aberdeen oil services group, predicting a pick-up in its engineering division, which accounts for about half of profits, in the second half of next year.
Some divisions, such as gas turbines, are likely to remain subdued. But Wood's low capital demands and the low-risk nature of its contracts, which are based on reimbursable costs, make yesterday's 288p, or 12 times next year's earnings, a good point to buy.
Daily Telegraph
International Ferro Metals mines ferrochrome in South Africa.
The Telegraph's Questor column recommended the shares as the ferrochrome price appeared to be at a bottom. However, fears have grown that the price could actually fall further next year. Ferrochrome prices are set on a quarterly basis in discussions between producers and customers.
In November, International Ferro issued a trading update in which it said the outlook for the short term was cautious, but it expected a return of stainless steel demand over 2010. Another major producer, EMRC also said that the Chinese recovery in demand was sustainable.
Based on current forecast the shares are trading on June 2010 earnings multiple of 40.6, falling to just 5 in 2011. The company does not pay a dividend.
Shares in International Ferro Metals were recommended on August 6 at 56¾p and the shares are now 56% below this level, compared with a market up 12%.
With uncertainty remaining into next year, Questor's stance on the shares is now hold.
Gem Diamonds: The Telegraph's Questor is confident in the long-term prospects of the diamond industry – and Gem.
The company is debt-free with about $100m in cash after an equity fund-raising earlier this year. Now is a good time to snap up quality, says Questor, strategic assets from distressed sellers and the share-tipper is looking 'for news soon on what it will do with this cash'.
The shares are trading on December 2010 earnings multiple of 69, based on current forecast, but this slips to 17.7 in 2011 when the market is expected to show a recovery.
The financial crisis has created demand problems in the industry, but the supply side remains tight. Because of this and the quality of Gem's assets the stance remains buy.
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