LONDON (ShareCast) - 'Hold' shares of engineering software group AVEVA for the long term, recommended the Tempus column in The Times on Tuesday. While AVEVA is seen by analysts as a "world-class British company with a leading position in its core business", the market has fallen out of love with the stock, according to paper.

The Times explained that earnings are "lumpy and unpredictable", while problems in its smaller enterprise solutions division have dampened sentiment. However, recent deals and contract renewals should lead to a stronger second half from the company after a relatively soft first quarter. Nevertheless, a strengthening sterling is one thing to watch out for given that the company generates 95% of revenues from exports.

Tempus said that the stock now trades on a "more subdued rating" at 22 times earnings, having previously sold on a multiple of nearly 30 times. "This begins to look cheap, given the strength of Aveva’s position with the big engineers, but it may take the market a while to appreciate this," the paper said.

The most recent round of trading updates from the recruitment sector "contain warning signs for investors", according to The Telegraph's Questor column, which said that the UK jobs market is slowing. Recruitment firms such as Hays, Michael Page, SThree and Robert Walters are seen as bellwethers for the wider economy but recent newsflow suggests a "fragile recovery", the paper said.

Questor highlighted that stocks in the sector have struggled so far this year, with firms with a large exposure to the UK hit by a slowdown in growth in the second quarter.

"The sector is interesting for investors as it shows that the market priced in a stronger recovery than was actually delivered. [...] For the long-term investor it is well worth keeping an eye on recruitment shares as a guide to the rest of the year."


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