Newspaper and magazine share tips

By This Is Money
Updated: 06:44 EDT, 1 October 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: We round up the latest share tips from national newspapers and investment magazines

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FRIDAY

Investors Chronicle

Home Retail, which operates Argos and Homebase is having a hard time at the moment. Chief Executive Terry Duddy warned that the group's first-half profits, due to be released in mid October will be down by 35-30% on last year. Whilst Homebase isn't doing too badly, Argos which accounts for about 70% of the company's sales, slumped by 5% in the second quarter. Retail sales in general are not rising so the trading pressure looks set to continue. Sell.

John Menzies expanded from its traditional magazine and newspaper distribution into airport cargo and ground handling. In the first half of 2010, aviation operating profits rocketed from £4m to £9.1m. the group also signed its first deal with a domestic carrier, Kingfisher Airlines in India, handling 360 flights a month. The group's conversion of operating profits into cash was an impressive 139% in 2009. An interim dividend has been resumed and analysts expect a 10p final payout figure. Buy.

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The Daily Telegraph

Tate & Lyle issued an update yesterday, announcing that the positive start to the year had continued in the second quarter. They also expect to report progress in cutting net debt. Their artificial sweetener Sucralose is still benefiting from the move to lower cost production facilities in Singapore last year. The shares are trading on a March 2011 earnings multiple of 11.6 and the yield at the current price is 5%. Hold.

Compass Group released an update yesterday ahead of its full-year results in November. Its sales growth will be 4% this year, including acquisitions. The business is highly cash-generative, and these solid cashflows have meant that it has been able to make six purchases since March. Their margins should continue to expand more strategic purchases are an option. Buy.

The Times

Icap is the world's biggest interdealer broker, and facilitates the trade of derivatives and products that are most required when the markets are difficult. Shares were marked back yesterday as earnings growth will be slower due to high interest rates from an already announced refinancing of debt. The long term outlook is positive with some regulatory uncertainties. The shares are trading on about 12.5 this year's earnings. Hold.

Finsbury Foods announced sales were down for the first time in their history in the year to July 4, mainly due to having to cut prices to keep selling. Chief executive John Duffy has been quick to respond, adapting ranges and speeding the pace of internal change, but results still take time. The cake market is still not back in growth so while the management might be doing the right things, their shares trade cheap, at only four times earnings for good reason. Avoid.

The Independent

Catering giant Compass Group announced positive results yesterday in a trading report before its full-year results in November. The shares hit a low of 362p at the end of 2009 but have sharply increased 574.5p this year, and their constant currency revenues are expected to be up by 4% over the year. The shares are trading on a forecast 2010 price to earnings ratio of 15.3 so maybe wait until they come down before investing again. Hold.

Ukraine focused Regal Petroleum announced poor results yesterday, with key wells underperforming and a row with the Ukrainian Minister of Environmental Protection. This resulted in chief executive David Greer resigning with immediate effect. The interim reports that operating profits were $3.4m, from a $6m loss last year couldn't stop shares tumbling down by 30%. Keith Henry, the Regal chairman will take over as chief executive and lead a strategic review but improvements could be a long time coming. Avoid.

THURSDAY

The Daily Telegraph

The price of gold has risen by about 20% this year, and this positive background has been good for Cluff Gold, that recently started production. The West African focussed gold miner revealed a maiden interim profit yesterday, and said it was on track to reach its full-year production target. In the six months to June, revenues were $61m, and the group's cash position stands at $8m. Shares are trading on a December 2010 earnings multiple of 12.6 times, falling to just 8.2 next year. Buy.

Domino's Pizza yesterday reported another positive update. In the 13 weeks to September 26, like for like sales came in at 9.9% and total online sales were up 69.7% to £33m. It is expected that full-year profits will come in at the upper end of market expectations. However, the shares are trading at a December 2010 earnings multiple of 30 times, falling to 25.7 next year, which is high. Hold.

The Independent

Misys sold off its controlling stake in healthcare group Allscripts earlier this year, deciding to focus on business software. Yesterday was its first quarterly update since the deal. The company now specialises in two areas of financial software; treasury and capital markets and banking. The former is performing strongly, with revenues up 4% but the latter's revenues are down 5%. Shares have bounced back from their low in December 2008 and there has been talk that if the new banking systems catch on, they could rise to 360p. Hold.

Moss Bros reported mixed results for the six months to July 31. The company, which hires and sells men's suits, reported an 11.6% rise in like for like sales but their pre-tax loss widened to £3.3m. The reason given for this loss was the refit of two major stores and severance costs. Although 2011 might be more challenging still for the high street, Moss Bros have no debt and analysts predict a return to profitability in the year to January 2012. Hold.

The Times

Smiths Group posted positive results yesterday. Chief executive Philip Bowman identified £50m of cost savings in 2008, to be achieved within three years. At the financial year end on July 31, £42m had been saved, the rest were on track and a further £20m had been identified. Debt has fallen by £48m to £837m, despite a £266m spent on acquisitions and dividends. The group is the market leader in airport body scanners, and its biggest division is medical. The shares sell on approaching 13 times this year's earnings. Buy.

The Allscripts disposal at Misys generated £780m, to be distributed to shareholders. The first quarter is always a quiet one for Misys, and despite some revenue problems, the long-term trend is still in their direction. Hold.

WEDNESDAY

The Daily Telegraph

Thomas Cook's full-year update yesterday revealed that its operating profits would be hit by £10m due to increased costs at its UK airline. However, they had engine problems on four planes, which resulted in having to rent replacements during peak season, which is the main cause of the extra costs. Winter bookings are up 5%, and bookings for summer 2011 rose 9%. The shares have a prospective 2011 dividend yield of 6.6%. Buy.

Unilever this week announced it would buy US hair products group Alberto-Culver, who own brands like VO5 and Simple, for £2.3bn. Personal care is the fastest growing category with the best margins and this deal would increase its weighting in their portfolio. Shares are bouncing back from their low in August, but are still £2 lower than their high of £20.15 in December. They are trading on a December 2010 earnings multiple of 14.5 and the yield is 4%. Buy.

The Independent

The collapse of property services specialist Connaught Group allowed Centrica to swoop in and pick up parts of their compliance business for the cheap price of £11.2m yesterday. This diversification strategy is proving successful and should accelerate their growth in the business energy services market, which is forecasted to be worth £2bn by 2015. Shares are trading at 13 times this year's forecast earnings with a 4.2% yield. Buy.

Man Group's recent trading update showed superficial signs of life, especially in the performance of the key AHL fund. But investors are pulling out funds and profits are forecasted to fall at the half. The yield remains strong, forecast at 6.3% this year, but the shares are not cheap and have fallen and not found any momentum. Whilst the yield is attractive, there no solid signs of revival. Sell.

The Times

The underperformance of its asset management division has affected Close Brother's attempt to build a tripartite financial services business. From 2012 financial advisers will be forced to comply with tougher regulations, which Close Brother's believe will create many 'mass affluent' clients needing new advisers. Building the required private client platform for this will take time and money. Profits from asset management fell to £3.3m from £12m, and will see a small loss in the current financial year. Shares are trading at about 11 times earnings and yield 5.6%. Hold.

The pawnbroker's has become an attractive option for accessing cash quickly. Market leader Albermarle & Bond Holdings believe it is a growth area, and have a five-year store expansions plan. 17 were opened in the last financial to the end of June, followed by a further 25 this year. They argue that their 37% rise in profits last year is not solely because of the recession, but actually the nineteenth consecutive year of increased profits. Shares are trading on about 10 times earnings. An off-beat buy.

TUESDAY

The Daily Telegraph

International Ferro Metals makes ferrochrome, an essential ingredient in the production of stainless steel. Shares may have fallen recently due to currency problems and the rising cost of electricity in South Africa but they returned to profitability in the second half of last year. They are expected to show a return to annual profit this year. The shares are trading on a June 2011 earnings multiple of 10.4, and as the long-term demand for stainless steel remains robust. Buy.

Last Friday, Korea National Oil Corp (KNOC) won control of Dana Petroleum, gaining 64.26% of the group's equity. The offer was at £18 a share, with Dana arguing that the shares were worth more. KNOC has to own 90% of shares in order to force the sale of the remaining shares and delist from the London Stock Exchange, which looks likely. The shares have risen by 50% since the recommendation was made. Sell.

The Independent

Publishing company Quercus was set up by Mark Smith and Wayne Davies in 2004, but aside from the odd hit, failed to make a mark until it signed Stieg Larsson's Millennium trilogy in 2007. The series is massively popular, and this month the group announced they had signed a deal with Sterling Publishing, a subsidiary of Barnes & Noble. Shares are trading on a forecast of 4.3 times full-year 2010 earnings, which looks very cheap. Buy.

Personal Group's specialise in employee benefits, and its core products are voluntary ones, meaning employees must opt in. Given the gloomy economic outlook, you can see that people may decide to cut back on such products. Yesterday's interims were positive though, pre-tax profits over the six months to the end of June were up 15%. The yield goes up to 7.1% next year from 6.9% for 2010. Hold.

The Times

Wolseley has lost a fifth of its size over the last three years and whilst it's in better shape as a result, it has required new management and £1.5bn of exceptional write-offs. Since March, nine businesses across the group have been sold or integrated. The results are starting to look positive as across the group, full-year operating profits before exceptional items was £135m, from a loss of £148m. It looks like this process will be a long-haul. Hold.

Aberdeen Asset Management is now huge, mainly owing to acquisitions which total five in the last decade. Chief executive Martin Gilbert has put deal-making on hold since February, with the emphasis now on organic growth and bedding in acquisitions. Their ability to do this remained unproven yesterday. Hold.