Sunday newspaper share tips
Each week we round up the Sunday newspaper share tips.
• For the Mail on Sunday's stock picks read the Midas column.
SUNDAY TELEGRAPH
Its niche positioning in air-to-air refuelling and oxygens makes defence group Cobham (208.75p) an attractive target for the likes of GE or Northrup Grumman. The company has a low valuation and a significantly under-geared balance sheet - it has net cash. It has one of the lowest valuations in the sector, trading on a price earnings ratio of 15.4 times against the UK sector average of 16 times. Despite the 60%-plus gain in the past three years we think readers should sit tight. Watch this space.
Recent first half results from leisure conglomerate Whitbread (£17.30) were fairly positive. Its budget hotel chain Premier Inns produced improved profit growth, while average profits per pub were up 23% on last year. Pre-tax profits were up 13% and the interim dividend was up 12%. House broker Deutsche Bank has re-set its target price to £20.50. Since August the group has spent £174m buying back shares. Deutsche expects the company to buy back £450m of shares and return a further £450m to shareholders via a capital return. It is not the cheapest stock in the FTSE, but there should be value to be had over the longer term.
Braemar Shipping Services (446p) offers pure exposure to one aspect of globalisation - the growth in shipping. Recent interim results showed a 42% jump in pre-tax profits to £7.1mn with the dividend raised by 19% to 8p a share. The company's forward order book is at a record high. Charles Stanley, the house broker, upped its full-year forecasts last week but said it was still taking a 'conservative view' of earnings expectations. It has a price target of 490p. The company is trading on about 10.2 times forecast 2008 earnings and a prospective yield of 5.1%. So long as global trade continues to increase, demand for shipping will do likewise. Buy.
CRH (€27.50), the international building materials company, has been benefiting hugely from the global construction boom, although this has not always been reflected in the company's share price. Since the start of July shares are down nearly 40% on the back of worries the credit crisis will hit the building industry in the US. But the company has promised to up its dividend next year. Analysts' target price for the group range around the €37 to €40 mark, while the company is trading on a price earnings ratio of 10.7, which is not unreasonable for the sector. We think the sell off is overdone and the company will continue to ride the wave of high commodity prices. Buy.
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