Newspaper and magazine share tips

By This Is Money
Updated: 06:47 EDT, 20 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 Times

Telecom providers, Intec Telecom Systems, has today issued its third profit warning this year alone, due to a cancellation of a contract that will see a hole of £4.1m in it's profits. Shares in the billing systems provider have fallen 5.25p to 59p. Trading is now more than 50% lower than at the start of the year. The company reports to have been winning 50% of the contracts it contested for, but announcements for these contracts should come later in the year, with potential buyers such as Amdocs and Oracle. Hold.

MasterCard, the credit card household name, have acquisitioned DataCash this week for £333m. The news comes after worrying reports that it was falling behind its rivals, PayPal, Visa and American Express. American Express is leading the charge with it's £192m purchase for online payments processing firm Revolution Money, which importantly allows it's customers to pay by mobile phone, openings doors in the emerging markets of Asia and Latin America. Buy.

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Investors Chronicle

Mining giant BHP Billiton is seeking blood after a £25bn bid for the Potash corporation was rejected, with the initial bid being described as grossly inadequate.' The Potash Company holds a 20% stake mainly in the fertiliser business and would provide BHP with a large footing in the market they entered earlier in the year with a £212m acquisition of Athabasca Potash. Buy.

Cairn Energy has confirmed its intentions of selling up to 51% of its main asset, Cairn India, to Indian miners Vedanta, for a staggering £5.46bn - the proceeds of which will allow Cairn to focus on it's exploration of Greenland, and the news of the first two wells Cairn has in Greenland will be announced on Tuesday 24 August. Buy.

Daily Telegraph

Despite England's shameful performance in the World Cup in South Africa, the tournament kept people away from the cinema. Cinema admissions in the 26-week period to July 1 fell by 3% to 22.7m, but the trend to high-priced 3-D movies meant that box office receipts rose 4.1% to £111.7m. Total revenues in the period rose 3.8pc to £162m, as the average retail spend per person remained identical to the same period last year, at £1.71. This meant pre-tax profits rose slightly to £11.8m from £11.6m. The current yield is still worth having for new investors. The current year prospective yield is 5%, rising to 5.4% next year. Buy.

The Independent

Following on with its trend of looking at sectors this week, The Independent today look at the pub sector. Pub operators raised a glass to the World Cup and early summer sunshine, toasting a much-needed boost after a torrid two years. But concerns are already growing that the tournament in South Africa and balmy weather may have been the calm before an impending storm.

Although the balance sheets of the UK's two biggest pub operators, Punch Taverns and Enterprise Inns, are better than two years ago, both companies are still burdened by a combined net debt of more than £6bn. The 2011 forecast price-to-earnings ration is just 3.6 at Enterprise Inns and 5.5 at Punch Taverns, compared with a loftier 11.8 at Mitchells & Butlers. The average for the sector is around 8.We much prefer pubs that have the flexibility to grow their estate and invest in the four Fs: food, females, and punters in their forties and fifties. For these reasons, we put JD Wetherspoons, M&B and Marston's on our buy list.

THURSDAY

The Daily Telegraph

Yesterday's numbers from South American-focused silver miner Hochschild were very good. The outlook for precious metals is pretty rosy. Silver is not only regarded as a 'store of value' investment against inflation but, unlike gold, it also has industrial uses to boost demand. Hochschild is Peru's second biggest silver miner, and posted tripled pre-tax profits. The company needs success in its exploration programme to earn a re-rating and the share remain a buy.

BHP Billiton and its potential $40bn Potash deal will be funded from cashflows and debt. BHP believes that, even after this deal, BHP will maintain its single 'A' credit rating. Cashflows at mining groups have shown spectacular improvements over the past 18 months – and BHP Billiton is no different. BHP shares were named as a tip of the year on January 1, and are now 7% below that level compared with a market down 4%. Buy.

The Times

The track record of Henderson Group buying asset managers is better than most. Having bought New Star for £115m in January 2009, it took on 85 of the 300 staff and £8bn of investment assets. It lost several star performers, however the company did say that over the past six months, the New Star assets had helped to drive a 40% increase in management fee income to £137.4m. Hold.

Lookers was understandably keen yesterday to draw attention to the prospects for its car parts division. This is a robust business for these times. The company raised profits before tax by 29% to £22.7m in the first half of 2010. As the company admits, the prospects for the sale of new and used cards are poor, but this is where the bulk of its profits comes from. On nine times this year's earnings, it's too soon to buy. Avoid.

The Independent

Today, The Independent takes a look at the insurance sector… It has been a lively old time for Britain's insurance industry in the last few months. Prudential was forced to scrap its blockbuster deal to deal to buy the AIA Asian business in June. Clive Cowdery's Resolution buyout vehicle then followed last year's acquisition of Friends Provident with a £2.75bn deal for Axa's UK life business.

Despite the bungled bid for AIA, Prudential's valuation has held up well. Investors place a premium on the Pru's big Asian business, which generated forecast-beating profits in the first half of the year. The Axa deal gets Mr Cowdery almost halfway to his target of combining a number of life companies to form a £10bn operation by 2012 that would cut costs and generate higher returns for shareholders.

WEDNESDAY

The Daily Telegraph

Vedanta Resources, the miner of natural resources, has this week seen its shares plunge by 20% as they planed a takeover of Cairn India. The deal could cost between $8.5bn and $9.6bn for 51% and 60% respectively. The deal has caused upset and analysts say that Vedanta's move from mining to oil drilling could be a risk as the two are very different and require different equipment. Heavy investment in the future and low prices for the short term mean Vedanta is a very good prospect. Buy.

Ashtead, the plant-hire group, with 80% of its stake in America, hire out plants and garden equipment to the construction sector, and although it has complicated endgames, it will look to be outperforming significantly. Shares are up 17% compared with the markets being down 3%. Buy.

The Independent

Rio Tinto, the mining company that control shares in lucrative Western Australia, Guinea and Mongolia have seen the mining sector boom in the last twelve months with highest rises recorded at around 50%. Prices average at $120 a tonne, mainly due to the high demand placed on metal by China and India. This month, Rio said the year's earnings would come in at 7% above forecasts and that half-year net earnings were 125% up on last year's six month period. Buy.

The rest of the mining sector is in an upturn and Gold Mining company Randgold Resources, who traded on a massive increase of 22 times the previous years rates, owes its success to an increase in gold prices from $950 an ounce a year ago to $1200 today. The shares track the gold price which we think will continue to rise. It will grow into its rating. Buy.

The Times

Resolution Pensions and Life Company, who have recently bought both Axa British Life for £2.75bn and Friends Provident for £1.9bn have now reached their halfway mark of becoming a company worth £10bn. Shares were last night trading at a healthy increase of 255.3p up from below £1. Don't expect great rises until September, when the Axa deal is completed, but even then realise that other companies in the same sector have started to assert themselves so this investment isn't without risk. Friend's Provident half-year numbers suggest that Resolution knows how to run a diverse group, and if you're brave, buy.

Pennon, water industry players, who own Viridor, waste management, have promised to raise dividends by 4% over the next five years, up from 3%. But the 23,000 investors will know that shares at 589p are around about a pound above their level, yielding 4.1% in May. Hold.

TUESDAY

The Daily Telegraph

Gulfsands Petroleum is in the oil exploration business, and have this week seen a dip in sales after their first well site in Tunisia, was dry. They stated the news was 'disappointing' and that they hope to achieve better results at the other of the three planned well sites. Earlier this year Gulfsands rejected a bids from Indian Oil and Oil India for their 50% stake in Syrian wells which are now pumping 20,000 barrels a day. The rejected bid was at 315p a share, and shares are now below this level. Buy.

Greggs the bakery chain, has seen shares drifting slowly as they have been for months. This only indicates that now is a good time to invest and hold for a medium term. In the last six months, shares have risen 2.9% to £321m and the pre-tax profits rose 12.3% to £18.6m. Greggs has announced plans to increase stores 40% to 2,000, adjusting supply chains to cut costs. Greggs is expected to see growth in earnings of 8% next year. Buy.

The Times

Oil drilling giants Cairn, who bought out Shell for £7m in Rajasthan, have said that they will return to investors 'a substantial amount' of the $6.65bn to £8.84bn it raises from sale of the majority stake in Cairn India to Vendanta. The shares last night were up 25p at 493p. Analysts put a net value on Cairn of 558p. Hold.

Hunting, the energy services group has been under scrutiny for holding on to the $400m profit it made from the sale of Gibson Energy in 2008, and not investing it back into the company. However, they have spent £125m yesterday on purchasing Innova-Extel, a Houston oil equipment business. The company make hardened oil equipment put to use for drilling, and this purchase looks to be a good one. This takes them into the electronic field for the first time and they've reported a rise in shares. Hold.

The Independent

The Independent's today gave an overview of the Defence sector and it makes depressing reading, following Defence Secretary Liam Fox, stating that the Ministry of Defence's budget will see cuts of 20%. The defence Behemoth BAE Systems has seen share prices sliding for months, as has pyrotechnics specialists Chemring, along with equipment services group Cobham. Homeland security techniques are likely to be the safest bet, and in this area Cobham are doing well, although analysts predict they are trading 20% below historical averages, leaving much room for improvement.

Ultra Electronics, surveillance and intelligence specialists also will do well out of the cutbacks, given that the cuts are primarily for forces abroad and not homeland security. Rolls Royce is another safe bet in this sector, given primarily by their haste to cut costs after the nosedive of the economy. Their marine and energy business' are trading well and can take up the slack from the other sectors when the cuts are announced.