Newspaper and magazine share tips

By This Is Money
Updated: 10:13 EDT, 10 December 2010

Each day we round up share tips from national newspapers and investing 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

The Telegraph

Ashtead, an equipment rental business, has had a torrid couple of years. It serves the US construction sector renting out equipment such as forklifts, drills and generators. But the company is starting to benefit as US construction companies are opting to rent equipment rather than spend large amounts of capital buying. In the second quarter of its financial year, the amount of fleet hire rose by 6%. Revenues rose by 9% in this quarter to £245.2m but pre-tax profits were down 14% to £9.6m Despite the market conditions, Ashtead has managed to invest in its business, pay a dividend and reduce its debt. Since January 2 the shares are up 95% compared to a FTSE 100 up 29%. Buy.

Standard Chartered Bank generates more than three times its earnings from Asia and other emerging markets. The bank has been the best performer among the world's 25 largest lenders by market capitalisation since the start of the credit crisis, according to Bloomberg data. Yesterday the group warned of rising costs but is still expected to post record profits in what would be its eight consecutive record financial year. Costs are up because the bank is increasing its branch network, hiring more staff and there are 'increased regulatory and compliance costs'. The yield is only 2.5% but the shares are up 45% based on the new ex-rights price, compared with a FTSE 100 up 20%. Hold.

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The Independent

Pre-tax profits surged to £23.6m for the electrical components distributor Premier Farnell. The business is expanding internationally and its exposure to Asia is enviable. The group benefited hugely from the first stages of the economic recovery as its clients restocked and boosted production, but next year will be much tougher. The yield is only 3.27% compared to its main rival Electrocomps which is yielding 4%. It is hard to see the shares going very far from the peak they have reached. Now is a good time to take profits.

Oil-and-gas group Salamander Energy announced a discovery at Angklung in Indonesia and is expected to follow it up with two nearby prospects. The chances of success at the Kecapi and Bedug prospects are 54% and 61% respectively. Next year's busy schedule will start with appraisal at Angklung and further exploration of Kecapi and Bedug. The opportunity for swift commercialisation will be helped by relatively shallow water, closeness of processing plants on the coast and Indonesia's thirsty gas market. Analysts at Oriel Securities estimate that these prospects have 'the potential to be a company maker'. Buy.

The Times

DS Smith, an office products wholesaler and packaging company, announced a change in strategy with the halfway figures yesterday. The company will move away from commoditised product and further into higher-margin packaging, the sort supplied to supermarkets. The company purchased the French packaging business, Otor for £247m in September. Revenues are up 10.5% to £1,174m and operating profits are up 10.8% to £60.5m, excluding the contribution from Otor. The dividend is up by a third to 2p halfway, in line with earnings. Hold.

The entertainment retailer, HMV, is going into its most important month of trading. But the current trading season has already started badly because of the weather. The group's three main markets, CDs, DVDs and games are all in long-term decline, competing against supermarkets and Amazon. There strategy is to move into other areas, such as live music. Shop floor space is being switched to iPads, speaker docks and T-shirts. The shares now sell on about 3.6 times this year's earnings and they have halved the dividend. Avoid.

THURSDAY

Shares Magazine

Telecoms company BT slashed its shareholder payout in 2009 from 15p to 6.5p, so you can expect hikes in the dividend for the next three years. This will give a boost to what is already a tempting 4.5% yield. Free cashflow is expected to be around £2bn for the 12 months to March 2011 which will reduce its heavy debt burden and fund the increases in dividends. BT is saddled with a huge pension liability, which puts off investors, but this has started to come down. BT's pension deficit has been cut from £7.9bn to £5.2bn since June, partly because equity markets have risen sharply and bond yields have started to rise higher. It is estimated that the dividend payout could advance by 10% per annum in the next three years. Buy.

Novae, the non-life insurer, has announced a capital return of £32.9m. This marks the final step in a capital restructuring aimed at improving return on equity performance. At the same time, Novae notes a share consolidation, which will reduce the number of shares in issue and potentially enhance dividend per share payments. The group offers a yield of 3.6% against a sector average of 5.4%. Buy.

The Telegraph

Swiss-based mining group Xstrata is now focusing on organic growth after Anglo American's rejection of a merger last year. The group has committed capital expenditure of $14bn based on approved projects with a further $8bn of approvals expected. Xstrata has strong exposure to coal and copper, which are likely to have price rises over the next year. In 2009 coal made up 41% of the group's operating profit. Between now and 2014, Xstratas' coal production volumes are expected to grow by 43%. The shares are up 43% since February 11 compared with a FTSE 100 rise of 13%. Buy.

Construction group Carillion is confident of meeting full-year targets. It started to scale back its UK construction business earlier this year and plans to reduce it further by a third over the next three years. The group is now looking to expand its revenue from its international business and grow its support services operation in Britain. The order book in the second half has so far grown by £1bn and there are lots of bidding opportunities in Middle Eastern countries such as Qatar. The company has a yield of 4.2% and is expected to be in a net cash position by the end of the year, with some analysts predicting about £70m. Buy.

The Independent

Stagecoach shares have had their ups and downs recently but overall the trend has been positive. First half profits were up by 43% to £108.7m with positives in rail and the US and UK bus divisions. The company has increased the dividend by 10% to 2.2p and the yield is a respectable 3.3%. There is an argument for taking profits but we think those who hang on in there will be rewarded. Hold.

Kesa Electricals owns Comet in Britain and Darty in France, but they had very different performances over the past six months. Darty France increased retail profits by 16.3% to €59.8m (£50m) for the six months to 31 October. However, Comet posted widening losses of €6.4m (£5.4m) which in part is due to its extensive investment in store refits. The chain benefited from sales of TVs during the World Cup in the first quarter but faced harder going in the second, with like-for-like sales falling by 3.7% at the chain. Comet's turnaround in the UK could take some time. Hold.

The Times

Micro Focus provides software for large corporates and keeps this maintained, but it has been a bad year for the group. They have suffered from unwanted staff departures and an ill-judged decision to cut marketing spending. In the first half revenues were up just 3.5% to the end of October and are not expected to provide much further growth. Micro Group has promised double-digit revenue growth in the 'medium term'. Avoid.

A year or so ago, the specialist retailer Game Group, was losing market share, mainly due to the big supermarkets and online retailers. It's like-for-like sales were falling by 15%. But Game has stemmed the decline with a comparable fall in the first ten months of this year at 8.8% and over the past ten weeks about 3%. However, over the next few weeks it can expect a quarter of its sales this year to fall at a time when competition from supermarkets will be at its most fierce. Game can never compete with the supermarkets on prices of the big releases. But Game's huge number of purchases should mean that smaller retailers run out of the titles first. With a yield of 8%, they would be a speculative punt based on the continuing appetite for computer games. Buy.

WEDNESDAY

The Independent

Leading savings and investments company, Standard Life, is buying a technology operation that provides software to salesman to help sell financial products. It is their third 'bolt on' deal in 12 months, and it wasn't cheap. Standard is paying 33% premium compared to the closing price of Focus Solutions. Standard still looks very cheap, currently sitting on a 35% discount to Shore Capital's forecast of the company's net asset value per share. The forecast yield is also a generous 6.3%. This combined with the cheap price, makes them an obvious hold. Hold.

BGlobal, a smart meter specialist, has made a profit for the first time. The company has returned a pre-tax profit of £1.31m, compared with last year's £670,000 loss. The company is set to benefit from European green energy targets, and has grown revenue by 4,447% over the last five years. With pressure on UK households to be more energy conscious, BGlobal is in a strong position. Buy.

The Telegraph

Hochschild Mining shares continue to surge and they have risen by more than a quarter in the last two months. Silver prices hit another high and the mining company is estimated to make a pre-tax profit of $209m. Hochschild recently sold its 6% stake in Lake Shore Gold, raising C$80m (£50.2m). Hochschild has recently bought into another exploration programme in Chile and has raised confidence in its prospects by increasing the mine life of its operations by finding new resources. However, should the silver rally come to an end, investors are likely to cash in on this year's gains causing a sharp correction. Hold.

Asset management group, Templeton Emerging Markets IT, released its half-year report last week and the fund's net asset value reached a record high in the period. Emerging market funds were some of the hardest hit by the financial crisis but they have also recovered more quickly than Western markets. Places such as Brazil, China and India show strong economic growth. This is a long term investment and despite their volatile nature, the markets are likely to continue to grow. Buy.

The Times

Amec, a consultancy, engineering and project management company, made a good decision in moving the company away from construction just before the recession. About 45% of its workload now comes from oil and gas and it has been benefiting from the oil boom. Its future plans include expansion into Australasia, the Middle East and South America. Yesterday it bought majority holding in the oil and gas consultancy, S2V Consulting, in Australia for £940,000. But the shares do not come cheap, as Evolution Securities has them on 17 times 2011 earnings. Buy.

Northgate, a commercial vehicle hire company, has made £53.5m operating profits in the first half to the end of October. This is up 30% and shows a remarkable revival since two years ago when the company had debts of £1bn. Average use in the UK is up to 92% but prices were only up 2%. In Spain these figures were 90% and 1% respectively. Concerns remain over Northgate's exposure to the building sectors in Spain and Ireland, as well as the need to reschedule its £500m-plus of debt. Hold, no need to chase.

TUESDAY

The Daily Telegraph

Mining giant Anglo American last night confirmed the sale of its Skorpion zinc mine to Vedanta for $707m (£451m) in cash and there are expected to be two further sales to Vedanta soon. Anglo American are estimated to make a pre-tax profit of $9bn for this year to December and the share price is now up 9% compared with a FTSE 100 up 7% since May 4. The company has some exciting commodities and expansion plans, with the first new mine set to begin operating next month. Buy.

The healthcare property investor, Primary Health Properties, which owns modern GP surgeries and pharmacies on long leases, has said that there is strong demand in its sector and the rent increases on leases in its third quarter were 3.23% a year. The group has bought a new medical centre in Buckinghamshire for £5.6m, which it will let to two GP practices, the local primary care trust and a pharmacy. The company has raised its dividend every single year since it was listed and the yield is 5.2%. Buy.

The Independent

Petrofac, an oil and gas services company, are due to release their pre-close trading update in 10 days time. The company has just purchased 20% of Gateway Storage Company the group behind a salt cavern storage project in the Irish Sea, for £33m. With dwindling North Sea reserves, this should provide a reliable income stream for Petrofac. The second phase of the company's South Yoloten gas project in Turkmenistan is also expected to start before the end of the year. Buy.

Begbies Traynor, who specialise in corporate insolvencies, has seen its revenues from the group's insolvency work fall by 9%. Adjusted pre-tax profits are also expected to be down 16% on last year, because its financing costs are increasing. But Begbies, who fares better in a downturn, is hoping for better times next year, when the VAT rises and the cuts start to bite businesses. Their work should start to pick up in the New Year. Hold.

The Times

Shares in BP are not far short of having recovered half the fall brought about by the Deepwater Horizon tragedy. The damage to the company from the disaster may not be as bad as first feared. Some of the $20bn fund, ring-fenced to pay for claims, may come back to the company and sales of reserves in Canada, the United States and South America, have brought in $18.5bn. Research from Evolution Securities suggest that the price may have a bit farther to go. Buy.

Reports over the weekend that Vodafone was on the point of selling its stake in French operator SFR, proved to be false. The disposal of 44% for £7bn, in the French operator and the £800m disposal of its 24% stake in Polkomtel, of Poland are not expected until some time in the new year. Vodafone has promised to raise dividends by 7% in real terms over the next three years, however, the arrival of dividends from its 45% in Verizon Wireless is not due until 2012. Hold.