Thursday tips round-up: Weir, Rio Tinto, Liontrust
Date: Thursday 21 Jun 2012
The Tempus column in the Times looks at engineering group Weir, whose shares have been in a sharp decline since peaking at 2,200p in February as the market began to doubt its exposure to shale. 'Much of the short-selling was by dealers who were expecting the slowdown in shale to mean these [profit forecasts] would be missed.'
After a confident outlook by the firm and Chief Executive Keith Cochrane, who reiterated the full-year pre-tax profit growth estimate of 10% to £460m, the shares have bounced from their low of 1,375p, rising yesterday to 1,558p. Selling on ten times earnings, the column believes that they have further to go.
Shares of Rio Tinto are undervalued, according to the Questor column in the Telegraph, which gives the mining giant a 'buy' rating following yesterday's news of a 4.86bn-dollar investment in its iron ore operations.
The majority ($3.7bn) of this spend will go towards its operations in western Australia's Pilbara region, while the rest will go towards the Simandou mine in Guinea. "Industrialisation and urbanisation should continue in Asia for many years to come and the Pilbara operation is the nearest source of cheap, quality iron ore," said writer Garry White.
Questor last tipped Rio as a buy in April with shares at 3,472p; they are now 11% below this level. They have actually dropped by 33% since hitting 4,595p in January - "Questor sees no reason why the shares should not hit this level again within the next year."
Tempus has also cast its eye over Liontrust Asset Management, who grew its funds under management (FUM) in the year to the end of March from £1.3bn to £1.5bn, helped by the purchase of Occam. The total as of the start of this week was £2.1bn, taking into annount its acquisition of the asset management side of stockbroker Walker Crips.
Chief Executive John Ions reckons that FUM could reach £7bn over the next few years. The paper said: "It is a volatile market. Liontrust shares trade on 12.5 times this year’s earnings, a discount to the sector. But they remain a speculative punt."
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BC
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