LONDON (ShareCast) - “One company that catches my eye is Vislink, a provider of secure communications in areas such as broadcasting and law enforcement. (…) Until now I viewed this company as a short-term trading opportunity. But my opinion has changed. I suspect that Vislink is on the verge of a multi-year growth cycle and its shares have the potential to double within the next 12 months,” wrote David Schwartz in the Financial Times this weekend. Mr. Schwartz cited several reasons for his bullishness. First of all, the company´s price graph suggests that considerable scope exists for its price to advance if the firm resolves the problem which caused its shares to decline. Precisely in this regard, the outfit has reinvented itself, modified the members of its board and carried out a cost-cutting program, laying the groundwork for a possible rebound in profits. As well, the company now has the opportunity to capitalize on several new revenue opportunities. Revenues are expected to be about £45m in the financial year just ended and management believes they will reach £80m a year within three years. “(…) I calculate that Vislink has a reasonable chance of achieving it target,” Mr.Schwartz adds.

In the next few weeks Indian authorities may announce their decision on which manufacturer has been selected to provide a new fighter-jet to the country´s armed forces, the Eurofighter consortium of which BAE Systems is a part or France´s Dassault. The contract, worth up to £6.4bn, would not see billions of pounds flow into BAE's coffers. In fact, analysts calculate that it would only increase the company´s earnings per share by 1% to 2%, but it could boost sentiment in shares of the firm. Far more important however is any news that may come out of the United States concerning the country´s budget, with further information possible this same week. That is because one of the biggest threats to the sector has been a reduction in US defence spending. BAE generates around 45% of its revenues in the country and a review of its defence spending is currently taking place. Nonetheless, total clarity on the situation is unlikely to happen until after the next presidential election. However, the market has been pricing in a very negative scenario on US spending, but a less bearish view is starting to emerge. The downside for the shares appears limited, supported by its relatively secure 6.1% yield in 2012. The earnings multiple in 2012 is just 7.6. The shares remain a buy for near-term income and long-term growth, The Sunday Telegraph´s Questor team says.

The UK water sector remains a safe haven in a world of uncertainty and the sector has performed strongly of late – and Pennon is one of Questor's preferred sector plays because of its ownership of the Viridor waste disposal and recycling business, as well as South West Water. Any economic slump will, of course, result in less business activity – which will translate into less waste for Viridor to process. But, conversely, when the recovery does happen there is cyclical upside in the shares too. This is an uncommon mix of defensiveness and upside, which is why the shares remain attractive to Questor. The company performed well in the first half of its financial year, with pre-tax profits up almost 12% to £107.4m. They are trading on a March 2013 earnings multiple of 15.2, falling to 13.9 in the next year. They are yielding a prospective 4.1% in 2013, rising to 4.4%, having moved off a recent peak of 727p a share. The shares are a buy, Questor says.

Galliford Try was not immune to the savage downturn that followed the financial crisis, slumping from a £60m profit in 2008 to a £27m loss the following year. But since then, it has bounced back, making profits of £19m in 2010 and £35m last year. In the year to June 2012 brokers expect profits of £60m, a return to pre-crisis levels. Even more encouragingly, they forecast that results will improve substantially next year and the one after that. Importantly, too, Galliford never stopped paying dividends, even when times were particularly tough. Now it is one of the most generous providers in the sector, paying 16p last year, and is expected to dole out 22p in 2012. While Chief executive Greg Fitzgerald had the company amass plenty of land when prices were low, he is less interested in growing bigger just for the sake of it. Over the next two to three years, attention is more likely to focus on selective expansion, profitability and cash generation. This could well mean increased dividends or large special payments for shareholders. The shares are 4761⁄2p and should move higher, especially if there is good news on trading and dividends when the half-year figures are released next month. Fitzgerald and his team are worth following. Buy, says the Daily Mail´s Midas column.

Goldplat is a rather unusual business. It combines traditional mining with gold recovery, taking wood chippings, carbon and even waste grease from other miners and extracting gold from them. The company is one of the few in the world that can perform this sort of work and it does so in South Africa and Ghana, producing more than 20,000 ounces of gold a year. Chief executive Demetri Manolis expects to deliver 5,000 ounces of gold in the year to June 2012, and brokers believe this will double next year and again in the following year or two. Goldplat has other exploration assets in Ghana and Burkina Faso. In the year to June 2011, the company delivered a 48% increase in profits to £3m and there should be a further good increase this year on the back of the combination of gold recovery and fully-fledged production. Midas recommended Goldplat in September 2010 when the price was 101⁄2p. Today it is 111⁄2p. The performance is hardly glittering but, now that production has actually started, the shares should gain momentum. Existing investors should hold. New investors might consider a punt, says The Daily Mail´s Midas column.

AB

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