Newspaper and magazine share tips

By This Is Money
Updated: 12:23 EDT, 13 May 2011

Round up: The latest share tips from national newspapers and investment magazines

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.

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FRIDAY

The Times

RSA, the insurer, is facing relatively modest claims losses of £25m from the first quarter's disasters in Australia, New Zealand and Japan. The group is a big player in household and car cover through its MoreThan brand, and suffered losses in a winter of awful weather (claims for burst pipes etc.). But a 9% increase in premiums sold in Britain, at 20% higher rates for motorists and 5% higher for homeowners, have dispelled these worries. A hold at the very least.

The advertising industry is emerging from recession and Aegis has outperformed its peers. More than half of its business is in BRIC countries, where growth is strong, and the US. Jerry Buhlmann, Aegis chairman, says the company will at least match last year's 5.8% organic growth in 2011 and should exceed it comfortably. Worries about downward lurches for the shares this spring persist, but it's still a hold.

The Daily Telegraph

BT chief executive Ian Livingston has transformed the company from the dark days of 2008/09. Major surgery, which included tens of thousands of job losses, have helped its Global Services division, which provides telecoms services to multinationals and governments, generate operating cash flow a year ahead of target. The Openreach division, which operates its network, is also in profit. Full-year dividend is up 7% at 7.4p. BT has come a long way, but there's further to go. Buy.

A huge 22.5% share price fall for SuperGroup yesterday is a bad sign. The company said its retail sales growth slowed from a whopping 91.8% over its third quarter to 39% in the fourth and SuperGroup hasn't opened as many shops as it intended. The dip is not a one-off. Last December, shares dropped 10% in a day when the company warned that cotton prices could affect its margins. Shares also bounce the other way – jumping 20% on good sales figures in January. But this sort of volatility isn't a good trait for uncertain times. After a good run, sell.

Money Week: Gamble of the Week

Internet services and emerging markets are two of the most exciting themes for the next decade. How about combing both? Asian data-centre provider CSF Group does just that. In Malasia it is a 35% market-leader. Its aim is to create an interconnected hub across Asia, ranging from Singapore to Vietnam. Aim-listed CSF was floated in March 2010 at 44p and is a speculative buy at 63.5p according to Money Week.

Investors Chronicle

Jupiter Fund Management shares floated last June following a management buyout three years earlier. Some 38% of the equity is still held by employees. Investment performance has been impressive. Over the past three years, Jupiter has clocked a 27% rise in net revenue to £231m. Around 83% of its assets under management are equities. Group finances are in a 'reasonable state', Investors Chronicle says, and the shares are effectively a leveraged play on the world equity markets. On the assumption that the outlook is favourable enough, Jupiter is a buy.

Restaurant Group, operator of Franky & Benny's, Chiquito and Garfunkles, generates lots of cash which is ploughed back into further profitable growth - a good mixture. Return on capital employed was 24% for the company last year, and the also company held up well during the 2008/09 recession. In 2010, net debt was reduced to £47m even after spending £21m on new openings. Operating in strong locations - cinemas, leisure centres and airports - where punters are still to be found during times of austerity bodes well. Buy.

THURSDAY

Daily Telegraph

HSBC singularly failed to impress the market yesterday with its strategy plans. Building big retail businesses – the strategic goal – is expensive, especially across 60 countries. But as the bluest of the blue-chip banks HSBC remains a hold and remains by far the most financially sound of all the UK's major lenders. Hold.

Barratt Developments has agreed a refinancing deal, costing £67m but removing one of the big uncertainties around the housebuildier. The deal gives greater flexibility and recognises seasonal variations – spring is typically the busiest time of year – should cut interest costs by at least £5m a year. Barratt is a play on rising margins, not UK house price recovery. Buy.

The Times

Drax Group, owner of Britain's biggest coal-fired power station in North Yorkshire, is trying to become its greenest too by increasing the biomass burnt. About 20% of output goes to British Gas owner Centrica, the rest to wholesale markets. Analysts are forecasting a 24p dividend this year with the shares on a 5.2% yield at 458p on Wednesday. Coal prices are rising slower than gas, boosting Drax's margins and with government support for burning more biomass, it's a hold.

First Group issued a profit warning in March for its First Student business in the US that provides the iconic yellow busses to school children. The transport group, which also owns First Great Western, blamed anything from the weather to higher labour costs for the 29% operating profits drop. But the group will generate £150 in cash this year with earnings per share up 7% to 22.12p and a final dividend of 15p. Uncertainties look set to remain and it's no more than a hold.

WEDNESDAY

Daily Telegraph

It never rains but it pours. A cursory glance at BG Group's results show a deluge of problems the oil and gas group had to grapple with in the first quarter. George Osborne's tax increase hit earnings by £162m, exploration and production slowed because of the political unrest in the Middle East, flooding in Queensland and a shutdown in the North Sea. In fact, things are not as bad as they first appear. BG is a highly-rated company, trading on a price/earnings ratio of 20 times. That compares with BP on 6 times, and Shell on 9 times earnings. Questor bought the shares at the end of March at 1564.5p. Hold on for further value.

Back in October, Questor placed a cautious hold on Captia Group, arguing that investors should wait to see whether the company could capitalise on these budget cuts. Since then, Capita's shares have risen about 5% and an upbeat trading statement yesterday proved that the company expects trading conditions to be strong during the second half of 2011. With the pipeline of future of business so strong, Capita is a buy opportunity for new investors.

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The Independent

InterContinental Hotels was the toast of investors yesterday after it delivered a buoyant performance in the US, which accounts for about two-thirds of its profits. In fact, the 4,400-plus hotels group, which operates the Holiday Inn and Crowne Plaza brands, boasted revenue per available room growth of 8.4% in the US over the quarter to 31 March, boosted by the continuing return of business travellers. Buy.

It has been no secret that the regional press has been in the doldrums since the financial crash, and that despite its best efforts to battle the tide, the waters continue to lap around Johnston Press. Yesterday, the group published its interim management statement for the 18 weeks to 17 May. The results showed more bad news for its total advertising revenues, which fell by just over tenth. And although the stock is only 2.2 times forward earnings, this is too risky a bet. Sell.

The Times

CSR has not had a lot of luck. The Cambridge maker of semiconductors has had problems convincing the market in the past, despite the successful purchase of SiRF Technology in 2009 that united its Bluetooth and wi-fi technology with the Californians' GPS expertise. CSR shares are selling on less than ten times' this year's earnings, against a sector on almost fifteen. The shares look like a good speculative gamble, but a gamble all the same.

It seems an odd time for an internet retailer to be pitching its tent on the High Street, just as chains such as HMV are suffering grievously from online competition. But N Brown, the catalogue and e-commerce fashion seller specialising in larger sizes, says that the three stores it plans in its native North West are more like shop windows than shops and will allow customers to see some of its wider range. The shares, up 12p to 298p, sell on about 11 times' forward earnings. Attractive enough, but concerns over the retail environment persist.

TUESDAY

Daily Telegraph

Inmarsat has long provided satellite communications for shipping and aircraft. Now it appears to have found a lucrative sideline in leasing spare radio spectrum. Results from the first quarter prove just how lucrative that venture may turn out to be. Competition in the satellite communications market is growing but Inmarsat retains around 50% market share and barriers to entry are literally sky-high. Inmarsat itself has a $1.2bn investment programme over the next five years. Questor held the stock at 616.5p in October last year. The shares have had a rocky ride since then but it's worth holding on for further growth.

The insurance market changed as a result of the spate of catastrophes this year and last. Insurers tend to rebound after one big hit, but rates rise as losses accumulate. That was the story insurer Hiscox was telling yesterday with its first-quarter results. Reinsurance rates are back up to last year's levels and higher in some cases. It expects widespread increases in June and July this year, with the potential for a 10% increase in US catastrophe insurance. Hiscox is expensive and insurance is not for the faint-hearted. That said, the company is well placed to take advantage of rising reinsurance rates. A cautious buy.

The Independent

That Serco's shares managed to remain strong throughout the session after the outsourcer issued an update yesterday is creditable. Worried by Europe's sovereign debt crisis, the markets were volatile throughout the day, making the strength in Serco's stock more meaningful. And indeed, the update was reassuring, with the group saying that it remained on track to deliver on expectations for 2011. The risks mean that we aren't quite ready to buy at this point. Hold.

When we last looked at Lonmin, we held back from buying despite the fact that the share price was relatively weak at the time, and despite the prospect of gains in platinum price. Yesterday, it confirmed its guidance for costs in 2011, which it expects to be broadly in line with wage inflation. This is encouraging, although one analyst did point out Lonmin still has a lot do in terms of meeting that target. Lonmin has already been through quite a correction. If the wider sector does in fact move south, it should stand firm, in our view. Buy.

The Times

Centrica is, according to research from JPMorgan Cazenove, the fourth-worst-performing European utility in the year to date. The shares were thumped 2.6% in March, when the Chancellor brought in his North Sea supplementary tax, and after yesterday morning's fall were off another 3.8%. The shares sell on a little more than 11 times' this year's earnings and have the support of a 5.2% yield. This suggests that the price has fallen too far, even if sentiment may continue to weigh on the shares until future trends are a little clearer. Hold.

Hiscox's shares are among the most expensive of the quoted Lloyd's insurers, trading at 1.3 times book value with a dividend yield of 4%. But if Hiscox is right and rates are rebounding, the shares have potential. Buy.