Newspaper and magazine share tips

By This Is Money
Updated: 08:45 EDT, 13 June 2008

Each week we round up share tips from national newspapers and investment magazines. For the Mail on Sunday's stock picks, read the Midas column.

FRIDAY

Investors' Chronicle

The board have made some good steps in turning around DIY retailer Kingfisher. But UK consumer is in the pits, and worse may be to come, as seasonal goods could be particularly hard hit by the credit crunch. The situation in France, where the group owns Castorama, might not be much better. Kingfisher's shares trade on a premium with other retailers. Given its lousy trading prospects, that's hard to justify. Sell.

The Times

Yesterday's £115m capital raising by 3i Infrastructure (3iI) shows that funds are still available for big infrastrucure deals. Just over a year after listing, the quoted spin-off of the FTSE 100 private equity investor has tapped the stock market for a second time. 3iI's shares have outperformed the FTSE all-share index by 25%. It is also beating profit targets. Given 3iI's pedigree and sound balance sheet, the shares, at 111½p, up 2½p, are a solid hold.

Daily Telegraph

On Wednesday, High Street retailer Home Retail Group learnt it is about to lose its blue-chip status in the latest FTSE 100 quarterly index reshuffle. The bright spot was Argos posting flat like-for-like sales at £929m - ahead of analysts' expectations of a 2% to 4% drop. If you already own shares in Home Retail Group, Questor would recommend holding on to them as they are yielding a respectable 6.5%. However, for new investors, now is not a good time to start buying. Wait for a clearer economic picture to emerge. Hold.

THURSDAY

The Times

Yesterday's annual meeting update from Lamprell, the Dubai-based company which makes and repairs oil rigs used in the Gulf and the Indian Ocean, revealed that its forward order book sitting at $550m (£280m). Lamprell trades at a steep-seeming 24 times this year's earnings, and 18 times next, and offers a negligible yield. Buy on weakness.

Full-year figures from Rensburg Sheppards, the private client investment manager, show that, although revenues grew by 7.4%, the rise in expenses at the Leeds-based business was even more subdued, only 5.5%. However, even at ten times current-year earnings, and yielding nearly 5 per cent, the shares, whose liquidity is hampered by Investec's 47 per cent stake, are not obviously cheap. Avoid.

The Daily Telegraph

Yesterday it was confirmed that Petrofac, the £2.3bn oil services company, which builds and designs refineries and oil industry apparatus, will move into the FTSE 100 in the latest index quarterly reshuffle. Investors who followed the Daily Telegraph's advice to buy the shares when they were trading at 510p in December would be sitting on a fine return. Hold.

Earlier this week Brandes, the US-value investor that has made hundreds of millions of pounds investing in the UK retail sector, sold almost a third of its holding in HMV. It may remain a favourite of short sellers - traders who sell shares they do not own in the belief they can buy them back cheaper at a later date - but shares in HMV are in fact up more than 10% over the year. But the fact is that HMV now looks very expensive. Now is a good time to tune out of the shares. Sell.

Shares Magazine

Redhall is the purest play on the huge nuclear decommissioning sector. Two years of hard work has a created a solid base for the engineering services group to grow. The shares are well above their sector average on a prospective price earning of 21 this year, falling to 18 in 2009, but usually you have to pay a premium for a quality. Buy.

Medical technology expert Smith & Nephew has its challenges, but demographic trends point to future sales growth, which should be turned into solid earnings progress by an internal productivity programme, a share buyback scheme and possible further acquisitions. Buy.

WEDNESDAY

The Times

Tesco considers itself a growth business and there is little reason to disagree. In 2008 they have a vigorous programme of hypermarket roll-outs in continental Europe, the opening of Fresh & Easy in the United States and the £958m purchase of Homever in South Korea. Today's first-quarter numbers provided further evidence of that slackening, with like-for-like sales growth of 3.5% coming in at the bottom end of analysts' expectations. Shares in Tesco, down 10% on the year, and, at 391.8p, trading at 14 times current-year earnings, will have trouble making headway until its market-beating credentials have been restored. Hold.

The acquisition by SABMiller of Vladpivo, the Russian brewer, for a sum rumoured to be less than $100m (£51.2m) is small beer compared with the $46bn bid that InBev is said to be preparing for Anheuser-Busch. Yet the deal cannot prevent SAB issuing a gloomy first-quarter trading update next month. Rising raw material and packaging costs have been covered by price rises, but the strong performance last time makes comparatives difficult. Buy on weakness.

The Daily Telegraph

Housebuilders have found they have nowhere to hide from the storms currently blowing through the sector. According to the Questor column, Persimmon will this week lost its position as the only housebuilder in the FTSE 100. The company is reckoned to be the most shorted stock in the sector, with around 19% of the group's share capital on loan.

Barratt Developments, which recently joined the 90% club of companies whose market value has fallen to a tenth of its previous level, is the worst performer. Barratt and Taylor Wimpey's net debt levels are exceeding market value and both will have to inform the market of how they are going to address troubled balance sheets soon.

Investors should steer well clear of the housebuilding sector. Avoid

TUESDAY

The Times

A quick glance at yesterday's full-year numbers and you wouldn't think that Workspace has been one of the worst performers in the property sector this year. Its shares have fallen 35% since January, underperforming its peers by 23% in the process. Although the yield on the company's portfolio has risen substantially, by one percentage point to 6.9% on an equivalent yield basis, it is too early to tell whether the low point has been reached. Avoid.

Hyder Consulting's revenues have doubled, operating margins have rebuilt from 0.5% to 7.6% and the company's stock market value has surged to more than £140m since it floated six years ago. Hyder's exposure to the Middle East, together with a falling pension deficit and a commitment to cut dividend cover towards four times (against 11 at present), should provide a floor at 370p, or 12 times current year earnings. Buy.

The Daily Telegraph

Thomas Cook's €50m (£40m) purchase of French operator Jet Tours from Club Med and the €60m deal for Canadian business TriWest suggests the company will be focusing on stripping out capacity. After performing strongly over the first four months of the year, Thomas Cook's share price has fallen nearly 15% over the last month, amid oil and consumer concerns. Sell.

John David Group, the retailer better known as JD Sports, appears to be bucking the retail trend. At a time when most non-food store groups are seeing sales fall, JD is doing the opposite. Like-for-like sales at the company over the seven weeks to May 31 have 'marginally improved' from the 4.2% growth reported over the previous 10 weeks. JD might be worth a punt as it has bucked the trend for some time now. The shares are a buy.