Share tips - best of the rest

By This Is Money
Updated: 04:43 EDT, 4 January 2007

We round up what the national newspapers and specialist magazines are predicting will be the hot stocks of the next 12 months. Also, check out the 2007 predictions from our very own Midas column.

The Sunday Times

The Sunday Times asked its reporters to pick their top tips for the year. Among the selections were:

BBA Aviation

John Waples said: 'Since the beginning of December the shares have slipped from 290p to 274p, and at this price they look much more attractive. In the long term this company is unlikely to remain independent, but in the immediate future it could make some attractive infill acquisitions, both in flight support for the commercial aviation market and in after-market services.'

Qinetiq

Dominic O'Connell wrote: 'The former government defence agency was privatised in 2001, and then floated in February last year. Since then the shares have hardly been stellar performers — from the flotation price of 200p they have drifted down, finishing the year at 193p.

'But all that could change with the award of a big Ministry of Defence training contract next year, and with further contract wins in America. If those contracts are not secured — as is always the risk with defence groups — there is the insurance policy that some in the City think Qinetiq could be a takeover target.'

Yahoo

Paul Durman argued: 'Yahoo is cautiously rolling out its new Panama advertising system. The improved results should become clearer as the year grows older. Management changes will improve investor sentiment, and a bid from Microsoft is another possibility. The shares are a good bet at $25.36.'

Royal Bank of Scotland

Grant Ringshaw says: 'As analysts at Sanford Bernstein point out, RBS's corporate banking business is not only booming but well spread. RBS's caution on lending means bad-debt provisions are now easing — in contrast to the gloom at Barclays and HSBC — and will boost retail banking profits. Savings and bancassurance products are driving retail banking income, and in insurance the bank is focusing on more profitable areas. The shares, at £19.93, are trading at about 9.4 times this year's earnings against 10.3 times for Barclays. All this makes RBS a good bet for 2007.'

The Sunday Telegraph

The Sunday Telegraph asked its team of business journalists to put together their tips for 2007. They picked:

Anglo American

The ST said that despite this company's strong performance, the shares continue to trade at a discount. It has embarked on a long-overdue restructuring and a new chief executive takes over in March.

Barclays

Management at the bank have taken steps to resolve the problem of customers' bad debt charges and some analysts believe that the UK core business will surprise come the interim results in the Spring. The company is also likely to be a bid target, with the Bank of America a potential suitor.

Glaxosmithkline

The UK's largest pharmaceuticals group has struck a number of deals to purchase experimental new drugs, but its shares have been dented by slowing sales and a lack of confidence in new medicines. The shares are trading below the market's price earnings ratio and there could be some upside in 2007.

Icap

The Sunday Telegraph says broker Icap makes money whether the market rises or falls. It says the growth of more sophisticated methods of investing, such as the use of hedge funds, plays into the companies hands that there is more growth to come.

WM Morrison

The supermarket group has been a favourite of contrarian fund managers for the past year, but the rest of the market could be catching on to the classic recovery play. The Telegraph says that new chief executive Marc Bolland will unveil his long-awaited strategy for the company in March and it is the last year that chairman Ken Morrison will be active.

SABMiller

The brewer is well-placed to benefit from emerging markets and should also see strong organic growth from the increased 'premiumisation' of the beer market. Analysts believe there is scope to increase margins through efficiency improvements and the launch of more upmarket versions of its brands.

The Independent on Sunday

Like the Sunday Times, the IoS asked its financial writers to recommend stocks for the year. They chose

Salamander Energy

Abigail Townsend wrote: 'Salamander does not lurk in the darker recesses of the Alternative Investment Market (AIM); earlier this month, it became the first oil and gas company to float on the main list for three years. Since then its shares have moved only marginally, but that shouldn't be a deterrent. After all, look at some of Salamander's early investors: the blue-chip private equity firm 3i and Irish racing tycoon JP Magnier, who made £40m on the float. Run by well-regarded industry executives, Salamander focuses on South-east Asia, where there are few pure exploration and production players.

Vodafone

Andrew Murray-Watson says: 'Vodafone is cleaning up its balance sheet by selling off its minority stakes in rivals, and is now more focused on pursuing opportunities in fast-growing developing markets. The company is trading at less than 13 times earnings and has a dividend yield of 4.8%. Vodafone beat forecasts when it last reported, and one further bullish update to the market will give the stock real momentum.'

Ceres Power

Tim Webb says: 'You need a leap of faith to buy into Ceres Power, a manufacturer of energy-efficient boilers, but investors should be rewarded. Listed on AIM two years ago, the company is still testing its main product - a domestic boiler that uses fuel cell technology - and has yet to make a profit. This year its shares have underperformed the market - the stock peaked at 334p in April and is now closer to 200p. But by the middle of next year Ceres aims to start showing prototypes of the boilers; if all goes well, they could be in the shops in 2009.'

Wolverhampton & Dudley Breweries

Danny Fortson wrote: 'Wolverhampton & Dudley has a network of more than 2,350 pubs around the country, making it a target for private equity firms, which have been gobbling up companies with large property portfolios over the past year. Alternatively, it could merge with rival Greene King, as has been rumoured, or take advantage of new regulations allowing pub companies to convert into tax-efficient real estate investment trusts (Reits). The company nearly doubled its annual profit from a year ago, raised its dividend and announced a share buyback programme. Drink up.'

The Daily Telegraph

The Daily Telegraph asked its City team to select this year's winning stocks. They chose:

ITV

City editor Damian Reece says: 'Well below the 135p BSkyB bought at, I'm confident Michael Grade, the new executive chairman, can start sorting out ITV's programming issues and reconnect with advertisers. A showman undoubtedly, Grade has a solid chief operating officer to look after the nuts and bolts. Buy.'

Omega Insurance Holdings

Richard Fletcher says: 'Over the past 18 months Omega, which is run by insurance veteran Richard Tolliday, has evolved into a global business with operations in both the US and UK. In September, it followed a number of other Lloyd's of London insurers and moved its domicile to Bermuda, which should mean a substantial reduction in its tax rate. Numis believes the move should increase earnings per share by 22% in 2007 and 33% in 2008, yet the share price has increased just 9% since it was announced. At 156p buy the shares.

Carnival

Alistair Osborne wrote: 'It was the FTSE 100's worst performer last year, with the shares down almost a quarter. That's a bit harsh given it's just posted record profits. This is despite being buffeted by hurricanes, soaring fuel prices and fewer Caribbean cruisers. Carnival's the best way to pick the pocket of America's ageing baby boomers, with their bermuda shorts weighed down with grey dollars.'

Pipex

Dominic White says: 'Pipex, which has 600,000 broadband subscribers, is trading at 13p or over 30 times forecast 2006 earnings, falling to nearer 20 for 2007. Investec's sum-of-the-parts valuation of 16.7p a share assumes a value of £250 per broadband subscriber. Raising that to £300 per subscriber would lift the valuation to 18.3p, offering serious upside to the share price. Plus Pipex uses David "the Hoff" Hasselhoff in its advertising. What more could you want?'

Greene King

Harry Wallop wrote: 'All the pub companies have had a great run in 2006. Greene King is no exception, seeing its shares rise nearly 50% during the year, making the shares at £11.37 far from cheap. But there should be more to come from the pub operator and brewer of Old Speckled Hen. Having swallowed Belhaven's Scottish pub network, and Hardy & Hanson's midlands estate, the company is looking leaner and more efficient than ever. The next step would be a merger or takeover of Wolverhampton & Dudley.'

The Independent

The Independent has predominantly chosen large cap companies to fill its portfolio in 2007 as it believes investors are in for a rocky ride. Amongst its picks are Glaxosmithkline, which is set to launch a raft of new drugs, and the Royal Bank of Scotland, which it believes is ready to ride out any storms in the financial markets.

It believes bookmaker Ladbrokes is well-positioned to do well in wider economic conditions, especially as it is expanding the international side of its business. It could also be a takeover target, with private equity house CVC Partners sniffing around.

For those that like a risk, the paper also backs battered online gambling player PartyGaming. It says the sector is in need of consolidation after the US outlawed internet gambling last year and PartyGaming could lead the way. Other stocks in the portfolio includes Anglo American, BSkyB, Experian, Millennium & Copthorne and Xansa.

Shares Magazine

Shares has put together three different portfolios – Large & Mid Cap stocks, Small Cap & Aim companies and a High Risk portfolio.

In the large cap portfolio it has included Cookson, Findel, ITV, Man Group, Mouchel Parkman, Petrofac, Royal Bank of Scotland, Taylor Woodrow and WPP.

The small cap portfolio contains Avingtrans, Broker Network, Carluccio's, Compel, Hydrogen, Stanley Gibbons, TMN, Uniq and Vanco.

Finally, for those that like a gamble it has put Coffeeheaven International, Cybit, Meridian Petroleum, Oxford Biomedica, QXL Ricardo, Redstone, Reneuron, Sportingbet and Ultrasis in its High Risk portfolio.