Sunday share tips: Gulf Keystone Petroleum, Homebuilders, Science in Sport
Date: Sunday 29 Jun 2014
Shares in Kurdistan-focused Gulf Keystone Petroleum are notoriously volatile. In large part that can be put down to its enthusiastic following among retail investors. Another important factor has been the long-running speculation that it could be the target of a take-over bid. Speculation in that regard was stoked last year by a court ruling which confirmed its ownership of the giant Shaikan field. More recently, just last week in fact, its founder Todd Kozel's decision to step aside was seen by some as laying the ground for an acquistion.
Kozel, who has been the focus of investor ire in the past, however, is staying on as executive director. Another three non-executive directors on the other hand did leave. That follows the exit of the Finance Director, last June, which should be seen as a red flag. "Even at these low levels we remain cautious," says The Sunday Telegraph's Questor team, which has a 'sell' rating on the stock.
The year-to-date has been quite choppy for those investing in homebuilders. First came the risk that the Chancellor might announce measures to curb rising house prices in the Budget. That was followed by Governor of the Bank of England Mark Carney's announcement of a cap on home loans and tougher checks. However, the sector received a boost from his remarks to the effect that the central bank is not looking to curb house prices directly. As well, more draconian measures had been expected.
As the sector's companies enter the period when they update investors focus will be on forward sales, average selling prices and their thoughts on what the impact of an interest rate hike might be. Despite all the uncertainty over interest rate rises the sector continues to be ahead of the benchmark and the issue of limited supply remains. Hence, and for those investing for the long-term, Questor continues to recommend a 'hold'.
The outlook is quite positive for the maker of nutrition supplements for athletes Science in Sport. Perhaps the best endorsement is the fact that its products are used by a wide assortment of professional athletes, including 60% of the cyclers in the upcoming Tour de France. To take note of as well, its products are scientifically researched, giving it an edge over rivals. Just as significantly, the firm is planning to expand internationally and broaden its product range. The sports nutrition market in the UK has a value of £400m but the worldwide figure is £29bn.
Yes, that requires making investments, hence the £2m share placing last April. Yet there are no plans for further cash calls. Chief Executive Stephen Moon is ambitious and the company is growing qucikly so the shares should rise. The possibility of a take-over from a larger rival in a couple of years' time also exists, writes The Financial Mail on Sunday's Midas column.
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AB
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