Newspaper and magazine share tips

By This Is Money
Updated: 11:21 EDT, 3 June 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

Investors Chronicle

Sunkar Resources is poised to become a leading player in fertiliser production. Sunkar recently launched a Chilisai phosphate project with an estimated capital cost of $900m. It is likely the producer will go into partnership with mining majors and importers to raise funds for the project, which has a pre-tax net asset value of $494m. Assuming fundraising creates a 50:50 joint venture, broker Ambrian values Sunkar's equity at 58p per share. The fertiliser sector is facing increasing demand and with estimates that global population is set to increase a third by 2050 make Sunkar an attractive long-term investment opportunity. Buy.

Jump ship at John Wood, which has been on a downward spiral this year. Concerns at the oil-services provider began in February when Wood sold its well-support division to US conglomerate General Electric for £1.71bn. £1.05bn is being returned to shareholders, while its shares in issues will be cut by around a third, bumping up likely earnings per share. Global oil market recovery last year meant in 2010 Wood's cash profits increased 71%, generating a profit margin of 13.5%. The impact of rising tax on North Sea oil could have negative implications for Wood, which last year derived 22% of its revenues from this area. Sell.

The Daily Telegraph

The technology sector looks set to continue an excellent year of performance. The benefit components distributor, Acal, profited from a booming market in gadgets as well as a double in shares by business networking site LinkedIn. Acal posted promising results this week: in the year to March, revenues rose 46% to £265m. The group swung to a pre-tax profit of £1.9m, up from loss of £6.3m last year. The final dividend was raised by 10% to 51.4p, bringing the total payout to 7.47p, a 6.7% rise. Shares are now trading on a prospective yield of 2.5%, but there is scope for the payout to be raised. Buy.

The only way is Essex for HSBC Infrastructure Company (HICL), which now fully owns one of its investments in Brentwood. The company revealed yesterday a purchase of 75% of the Brentwood Community Hospital for £4.6m. It recently bought stakes in three UK private finance initiative (PFI) schools projects for £17.2m. Pre-tax profit for these funds soared from £25m to £45.2m over the last year. The final dividend payment was a total of 6.7p for this year, an increase of 2.6%. The shares were first recommended at 109.5p in June 2009, and are up 8% since that point. However, this is not an investment for those seeking capital gains, although these are likely over time. The shares are a dividend play in a time of low yields, with assets being long-term and secure. Buy.

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The Times

Is this the end of the Asos bubble? Share prices for the online fashion retailer went down by 8% after a solid rise in shares since October 2008. About half the analysts think stock has peaked, while the other half (mostly American banks) think growth will continue. Full-year profits before tax were up 41% at £28.6m in the year to the end of March. Investors should be cautious as, despite exciting prospects, Asos is vulnerable to any turn in sentiment on internet stocks. Sell or hold.

Environmentally-friendly stocks are a good bet for investors. Rising oil prices have increased the demand for renewable energy sources. One such provider is Impax Asset Management, a specialist manager of listed and private equity funds investing in environmental energy. Total funds grew from about £500m in 2006 to £2.36bn at the end of the company's first half on 31 March. First-half revenues rose by 56% to £9.86m, while earnings per share were up 15% to 1.27p. This is not a stock to hold for income, though it does pay a small dividend. Hold.

The Independent

B&Q owner Kingfisher enjoyed a sharp rise in profits in its first quarter, boosted by warm weather in its major markets. The company warned a tough year ahead, especially in the UK which accounts for nearly half of group profits. But Kingfisher powered ahead for the quarter to the end of April, with retail profits higher by 19.1% to £174m. While Kingfisher's shares slipped back yesterday, they have been on a good run since August 2010 and now trade on 12 times forward earnings. Its global scale will shelter it from any UK economic storms. The shares are unlikely to surge in the next year, but we reckon Kinghfisher should provide steady gains. Buy.

The headline figures in Redhall's half-yearly results were far from positive. Revenues in the six months to March stood at £64.3m, down from £65.4m in the first half of last year. Adjusted pre-tax profits at the engineering support services group came in at £1m, down from £3.3m. The main driver was the termination of a major contract with Vivergo Fuels. Stock uncertainty surrounds Redhall's ongoing legal process to recover costs of £14.6m from before the termination. Until there is more clarity on the Vivergo issue, we'd rather keep away. Sell.

THURSDAY

Shares Magazine

It might be early days, but mobile marketing and content supplier InternetQ is already profitable and generating a free cashflow. Results to 29 March show sales rising 106% since flotation to €35.5m, more than double the mobile industry average growth rate. Analysts at RBC Capital Markets predict sales will hit over €50m this year to December 2011. Expect a compound average growth rate of 38% in revenues through to the end of 2013, reaching over €92m. Buy.

Steer clear of Carpetright (CPR) which has already issued three profit warnings this year. Be sure to sell ahead of its preliminary results, which are due 28 June. The latest news is that the £484m cap flagged income for the year to April would be slightly below the £17.2m made in the 2009 financial year. Disappointment stemmed from a 6.5% sales decline during the 11 weeks to 16 April, which saw like-for-like sales retreating 6.3% in the UK and Ireland. Looming interest rate hikes place a further cloud over prospects, while increasing material costs are causing carpet price inflation which the company is struggling to pass onto customers.

The Daily Telegraph

It's time to cash in in Lonrho, despite the conglomerate's long-term prospects. This week's interim numbers were promising: in the six months ending March, revenues rose by 29% to £61.1m, with pre-tax losses rising to £2.9m from £1.5m. Lonrho saw growth in all its divisions: transportation, agriculture, infrastructure, hotels and support services. Since last October, the shares have been in a trading range of 16p and 18p and after this week's positive numbers, remain in the middle of that range. Shares were first recommended as a buy at 7.9p in June 2009, so they are showing a profit of 120%. Sell.

Fifth-largest UK waste collector May Gurney offers a promising outlook for investors. The support services company expects significant growth in rates as local authorities try to meet recycling targets. In the year to March, revenues rose by 18% to £571.4m, with pre-tax profits rising to £18.8m from £18.4m. The total dividend was raised by 20% to 6.6p, with the final payment of 4.52p being made on 11 July. The current prospective yield is 2.6%, rising to 2.8% next year. The shares were recommended at 218p on 4 October 2009, and they are now up 25% compared with the FTSE 100 up 38%. Buy.

The Independent

It's good news once more for Galliford Try, the household construction company. The 103-year-old firm yesterday boasted it had been selected as a partner on three housing contracts worth a total of £584m. The news helped push Galliford Try's shares above a 12-month high, continuing their strong rally since December. That said, heights of 710p in September 2009 remain a long way off. Galliford Try also announced in May that it had secured new banking facilities of £325m until 2015. Its shares trade on multiples of around 9 times forward earnings. Buy.

Trifast issued better than expected full-year results, with a gross margin improvement to 25.2%. The industrial fastenings manufacturer improved despite an overall slowdown in the sector's pace of growth. There were positive hints yesterday on the dividend. No payout was proposed, but the company hopes to address the yield this year, which predicts well. A positive decision could drive the shares higher as income investors move in. Buy.

The Times

It's progress, but slow progress, for UK builders' merchants Wolseley. Its third-quarter figures show that debt reduced year-on-year from £1,336m to £824m. The downside is that any improvement in trading is coming from self-help, cost efficiencies and gradual improvements in margins. The US compromises about 40% if the business, where the housing market is in the doldrums. Nevertheless US improvement meant a 30% rise in trading profits to £131m. Wolseley's performance is encouraging, but it will be a long time before it sees the sort of margins it was enjoying before the downturn. Hold for further signs of recovery.

The Intermediate Capital Group (IGC) has a growing fund management side, but its core business is racked with debt. A number of existing loans that will mature over the next few years and cannot be renewed means the debt gap is widening. The group still reported one of the most profitable years in its 22-year history, with a growth of 76% in pre-tax profits to 31 March. Free cashflow stood at £107m, easily enough to finance a 12p final dividend and a total up 6% to 18p. IGC invested £1bn, generating an impressive 18% real rate of return. Hold.

WEDNESDAY

The Daily Telegraph

For farm supplier Genus, the markets are continuing to improve in spite of rising feed costs. Trading in the first four months of the year was ahead of last year. Net debt at April 30 was £85.4m, lower than the £94m at the same stage last year, but higher than in December. The shares are trading on a June 2011 earnings multiple of 23.7 times, falling to 2.7 next year. This is a deservedly high rating, due to underlying trends towards a global food crunch in the next few decades. Shares since 2009 are up 17% compared with a FTSE 100 up 17%. Buy.

Tate & Lyle posted an excellent set of full-year numbers last week. In the year to March, sales rose 7% to £2.7bn, with pre-tax profits rising to £245m from a loss of £116m. The final dividend was raised by 5% to 16.9p, bringing the full-year payout to 23.7p, a rise of 3.5%. By divesting its sugar factories around the world, Tate & Lyle has ensured its earnings will be less impacted by wild swings in commodity prices. The shares are trading on a March 2011 earnings multiple of 12.7 times, falling to 11.9, which looks pretty full. The prospective yield at the current prices is 4%, rising to 4.3% next year. This is an attractive yield, but the rating remains hold.

The Independent

Publishing powerhouse Bloomsbury produced uninspiring headline figures at the end of last week. Pre-tax profits fell to £4.2m in the 14 months to February, down from £7.1m in 2009. The publisher pinned its performance on the weakness of various one-off items. The rise of e-books also presents challenges for the company, which will have to deal with the globalisation of the book trade. Altium puts the stock on more than 14 times forward earnings, which is fairly full. However, investors should be wary of the 3.8% forecast yield. At a share price of 130.9p, Bloomsbury is a hold.

Renold's full-year figures might be below the estimates of FinnCapp analysts, but the engineering group remains well above levels seen two months ago. Underlying revenues went up 19% this year to the end of March, while the company's underlying order intake was up by 23%. The order book was up 13% over the year. Renold, which manufactures chains, gears and couplings, reduced its pension deficit and generated money over the second half of the year. Investors should not be put off by a fall in share price of -3.25p which is likely to be the result of short-term profit-taking. Stock trades on under 10 times forward earnings. Buy.

The Times

Things are looking up for Norcros after a bleak year of trading. One of its biggest competitors in the tiles area went into liquidation last summer, allowing Norcros to extend its market share to 17%. The housing cycle has adversely affected sales in the tiles and showers made by Norcros. Norcros expects revenues for the year to March 31 to be up by about 7% and pre-tax profits sharply improved from £3.4m to £9.7m. The shares remain on about ten times earnings, but further progress could be slow. Hold.

Note the strength of Johnson Mattley shares, up 4.6% yesterday. The precious metals group has its results out tomorrow and an encouraging note from the Royal Bank of Scotland points to the robust prices of platinum. The fact that Johnson Mattley's closest competitor, Belgium-based Umicore, has reported sales up 16% in the first quarter is encouraging. Buy.