Newspaper and magazine share tips

By This Is Money
Updated: 08:18 EDT, 13 August 2010

Each day we round up share tips from national newspapers and investment magazines. For the Mail on Sunday's stock picks, read the Midas column.

Round-up: Latest share tips from the national newspapers and investment magazines

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FRIDAY

The Daily Telegraph

Petroleum company Dana have seen sales plunge after rejected the bid for the group by Korea National Oil Company. It is likely that they are looking at £20 a share for the group rather than the £18 KNOC was prepared to offer. It cannot be forecast whether they'll return with a higher offer; however shareholders should not bank on it. Trading on a December 2010 earnings multiple of 14.5 falling to 12 in 2011. Hold.

CVS shares have plummeted recently and the market is fretting that the vet consolidator will issue another profit warning. It was estimated in June that the turnover would be around £85m - £1m below the expectations for the final quarter. The share price is now trading on six-times the downgraded current year earnings and 5.7 times in 2011. Based on current predictions, the multiple in 2013 falls to just 2.9 times. Hold.

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The Independent

Findel, the ailing home-shopping and educational supplies business reported losses of £76.1m for the last financial year. Such a large debt on revenues of £547m last year is a main reason why Findel is now a penny share, a significant fall from last year when its stock was nearly 50p. None of Findel's three core divisions managed to increase profits last year. Sell.

The online gaming group Sportingbet attracted more than £50m worth of bets during the World Cup and the profits held up well. The stock trades on a multiple below 10 times forecast earnings for this year, but at the same time, it offers a yield of over 2%; that figure rises to nearly 3% on the broker's estimates for 2012. To miss out on this would seem careless. Buy.

The Times

Lincat is the main company in the kitchen equipment sector. By targeting catering supplies markets with equipment such as steamers and ovens to pubs and sandwich shops, the company is doing well and winning market share on the back of a weak pound. Sales are 6% higher at £15.8m while pre-tax profit gained 30% to £2.7m. Net cash was at a healthy £6m and Lincat raised its dividend 8% to 11p. Its valuation of 7.2 times 2011 forecasts and yield of 6.1% is too attractive to miss. Buy.

PayPoint offers the people of Britain its over-the-counter service in local convenience stores to pay a gas bill or top up a mobile phone. PayPoint processed 176m transactions in the first six months of 2010, 6% higher than the year before. However, revenue is down 4% at £61m as more people sign up to long-tem mobile phone contracts. The results were better than expected. Shares trade at a modest 9 times projected earnings which is undemanding. Hold.

Investors Chronicle

BAE Systems has been under pressure in providing funding and equipment such as high-speed jets and armoured vehicles to the war in Afghanistan after the capital equipment budget is almost certain to be slashed. However, with recent sales with Oman, Japan and India, BAE's dividend still looks secure. The chances are that any investors will be compensated for the risk they are taking by the prospect of a secure and gently rising dividend which currently yields at 5.1%. Buy.

Cable and Wireless Comms supplies a collection of fixed-line, mobile and broadband services across the globe, from the Caribbean to Central America, but business is in decline. The Caribbean is the biggest single market but revenues have fallen 10% to $873m (£598m) in the year to 31 March, while a similar slump in profit margins led cash profits to plunge 20% to $270m (£185m). Panama, worth a quarter of the group is not doing much better, with a reported 5% revenue decline. Trading on 20 times current year estimated earnings, the shares are rated for growth that isn't there. Sell.

Shares

The makers of specialist adhesive tapes, Scapa Group have seen growth in nearly all markets and regions. It has seen a 10% year-on-year increase in sales and also making a profit of £1.6m in the second half.. The Ashton-under-Lyne firm estimates the global market for specialist tapes is growing by around 5% per annum and worth roughly £25bn. Although shares in Scapa have been held back due to problems over its pension deficit, Scapa looks like it is heading for the shares to come in and it shouldn't be missed. Buy.

Nautilus Minerals are hoping to be the first company to uncover metals such as copper and zinc in unchartered territory. Nautilus says it is not short of interested parties and it is merely a case of agreeing on terms. The company argue that bad weather would only result in downtime for 0.5% of the year compared to 30% for oil and gas companies in the North Sea. It will use remote-operated vehicles that can work up to 2000 metres depth, with competition only being able to reach 1,500 metres depth. Buy.

THURSDAY

Daily Telegraph

Balfour Beatty shares have been extremely volatile; at times they have shown good profits only for sentiment to sweep them lower. Since the election, there have been concerns about the group's exposure to UK government contracts and the shares are now 13% below the recommendation price. After a period of poor performance, the shares have bounced, but are still trading on a December 2010 earnings multiple of only 7.9 times, falling to 7.5 next year. This remains an attractive entry point. Buy.

Last week, satellite group Inmarsat's second-quarter results confirmed things are back on track. The group plans to spend £765m on three new satellites from Boeing to increase its mobile broadband network. This will give Inmarsat global high-speed coverage by 2014. They are trading on December 2010 earnings multiple of 22.2 times, falling to 19.2 next year. This is a high rating – and a lot of the company's prospects appear to be priced in at this level. Hold.

The Independent

Grainger, Britain's biggest residential property company, yesterday trumpeted the resilience of its portfolio, despite it reinforcing recent downbeat industry data that price growth in the housing market has 'slowed.' Over 10 months, Grainger has sold 593 vacant units for £90.1m at a margin of 42.6%, compared to margins of 35.5% on sales of 625 units for £86m last year. Buy.

Virgin Media, a company that purely focuses on customers in the UK, is finally becoming visible to the country's investors as well. What's important is free cash flow has been growing. It was £276m in 2008, and estimates it will grow to £559m by 2012. The company was confident enough to launch a £700m capital return to its shareholders last month, which prompted a series of analyst upgrades. In the current market for broadband and pay TV, the sure financial footing gives us confidence. Buy.

The Times

London-focused property company Minerva, had a bid by Natie Kirsh, South Africa's wealthiest investor last year, in which he already has a 29.9% stake. However, the 50p a share bid was unsuccessful. Now the shares are at 98.5p and KiFin, the investor vehicle owned by Kirsh, has been accused by Minerva of trying to get the company on the cheap. Mr Kirsh has said he isn't going away. Hold.

Software company Micro Focus is starting to live up to its name. It started trading at an all-time high of 540p as it closed in on a landmark value of £1bn. However the departure of finance director Nick Bray, has triggered a fall in the share price. The shares look cheap at ten times 2011 forecasts but are unlikely to gain before a new finance director is appointed. With growth looking hard to come by, hold.

WEDNESDAY

The Times

The biggest tour operator in Europe – TUI Travels has been put under strain after the volcanic ash cloud in May has left consumers unsure whether to book a holiday until the last minute. Consequently, TUI Travel's Thompson and First Choice businesses have been left with more holidays than they would like to sell, pushing margins down and meaning booking patterns would remain uncertain for 12-18 months. The collapse of Goldtrail Travel and the 10% fall in shares – 22.5p to 203.1p could encourage TUI to take the rest of their already 54% of owned shares. Hold.

The Israeli company BATM who specialise in advanced communications has experienced a loss of $340,000 in the last year and shares continued to fall a further 6% to 24p. The shares trade at 59 times KBC Peel Hunt's earnings forecasts for the year, but even so, BATM seems risky at this level so best to hold.

The transformation of the British engineering company Interserve into an outsourcing services provider has seen promising prospects overseas, despite pre-tax profits sliding by a third to £27m as revenue decreased from £951m to £945m in the first half of 2009. However, a near 2% rise in interim dividend to 5.6p helped boost shares to 210p. Analysts were dividend over whether the company's lowly rating of 5.6 times forecast and its 8.6% yield merited it worth buying, but shares trading at exactly half the 2006 peak of 420p, a re-rating looks past due. It's a buy.

The Independent

Pendragon – the automotive retail group saw revenues up by 16% to £1.8bn and an underlying pre-tax profit up 48% to £15.7m in the first half of the year. Their stock appears appealingly valued on a price-earnings ratio of 10.7 times this year, falling to just 7.5 times in 2011. However, another dip in the economy may threaten to drag consumer confidence back down. Hold this one for now.

YouGov recently announced its interest in expanding itself across the Atlantic, rather than simply existing only in the UK. YouGov provided mass amounts of polling data during the recent general elections, and has now publicised the acquisition of Harrison Group, a US research agency for up to $13m. YouGov shares have been under 40p for the past 2 months meaning a sharp loss, however the companies' ambitious plans make it worth investing in for the mean time. Buy.

DSG International, the electrical company that owns a chain of well known computer stores, including Curry's, PC World and Dixons has had an uplift in sales and profits grew by 61% to £90.5m for the year to May1st. DSGi now trade on a 2011 price earnings ratio of 11.2 which is where it should be in the retail sector. However, despite the positive energy from DSGi, the next year may be a struggle for electrical companies and cash may not be immediate. Hold.

The Daily Telegraph

The oil and mining services company Cape have unveiled a £22.5m contract in Algeria to provide thermal insulation work on a petrochemical project as well as beginning a joint venture with the State Oil Company of Azerbaijan (SOCAR), which will provide opportunities in the future. Cape predicts its interim numbers to be ahead of target, and continues to generate a positive cash flow with net debt below £100m at the half year. The average price of the shares is monitored at 362.5p and are trading on a current year earnings multiple of 7.2 times, falling to 6.5 in 2011. Cape is ahead of the expected return to dividend payments next month, making the shares a buy.

RSA Insurance provides property, liability, vehicle and specialist insurance products worldwide. Pre-tax profit was £302m in the six months to June 30th, up from £301m last year. Net written premiums rose 9% to £3.8bn and the group increased the interim dividend by 7% to 3.12p, which will be paid on November 26th. RSA's shares trade on a December 2010 earnings multiple of 10.2 times, falling to 9.4 next year, and the premiums are up by 7% to £1.9 bn and the combined operating ratio was 89.3%. RSA have risen 14% compared with a market up 6% and the shares are still yielding 6.4%. A definite buy.

TUESDAY

The Independent

Supermarket chain Morrisons continues to grow and expand more rapidly than its three major contenders; Tesco, Sainsbury's and Asda. The supermarket trades on a 2011 earnings ratio of 11.9 making it one of the cheapest European food retail stocks. It plans to become a 'nationwide' supermarket by expanding to the South. Its robust financial position and progressive dividend policy make it a buy.

The construction group Morgan Sindall published results saying that demand for office space is still strong. The company trades on a discounted 2010 price to earnings ratio of 9.1 times. However they do not look like a bad bet, especially with its 12p dividend giving investors 7.5% yield. With Morgan Sindall's cash up 55% to £138m, keeping hold of the shares seems a good bet. But if the dividend starts to look dangerous, drop as quickly as possible. Hold.

The Times

Recent plans to expand six of the Mitchell & Butlers chains has made the encouraging target this year of converting 40 outlets ahead of schedule, with the group expected to complete about 50 projects. While the current disposals from the group have been dilutive to their earnings, it has been estimated by analysts that money reinvested in the core business should produce an annualised return of roughly 20%, thus should boost earnings in the second year by 7%. Buy.

Shares have fallen by almost a third for education IT reseller RM, from 195p at the end of June to 137p yesterday, and the stock is cheap as it trades at 8.4 times earnings. Nonetheless, only 12% of RM's revenue is derived outside the UK, in comparison to Promethean – Britain's other educational technology play which derives less than 10% of its revenue on home soil. Hold.

The Daily Telegraph

Infrastructure products group Hill & Smith increased its interim dividend by 10.6% to 5.2p a share. It will be paid next year on January 6 and shares go ex-dividend for new investors on November 24. Hill & Smith reduced its net debt to £76.4m from £106.1m – therefore interest payments should continue to fall. A 4.5% yield means the shares are supported. Buy.

The domain name manager Group NBT's shares are trading on a June 2011 earnings multiple of 13.7 times, falling to 12.4 in 2012. The shares were fist recommended as a buy last year on March 12th at 214.5p, which Questor restated three weeks ago when the shares were at 283.5p. From the initial recommendation, the shares are up 56% compared with a market up 46%. Buy.