Newspaper and magazine share tips

By This Is Money
Updated: 12:20 EDT, 4 July 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

The Times

Yesterday's full-year results from Greene King, which has seen its shares fall by a comparatively modest 58%, suggest that, while the trading environment is tough, the most agile operators can still make decent money. The other factor in Greene King's favour is its financial position. It recently refinanced on good terms, removing any credit risk until 2012. Investors seeking long-term value could do worse than buy into Greene King.

Centrica is a well-run company with one big problem. With 16m customers, Britain's biggest retail supplier of gas and electricity lacks enough of its own power stations and gas supplies to serve them. The company is unlikely to shy away from raising retail prices in the next two months – a step that will help to protect its short-term margins. Hold.

The Daily Telegraph

Where to now for United Business Media? A fortnight ago the company called off talks about a £3bn merger with rival business information publisher Informa, owner of shipping bible Lloyd's List. The shares are trading on 9.4 times forecast earnings, yielding 4.7% and look decent value for the long haul. Hold.

Greene King's small size relative to competitors such as Punch Taverns means it has been able to give greater focus to the quality of its estate, while growing food sales have served to replace the bulk of lost drinks takings in the wake of the smoking ban. The Questor column recommends sticking to more defensive stocks for the time being. Avoid.

Investors Chronicle

Property services group DTZ knows only too well that is market is shrinking. Last year the company sank £60m into acquiring UK shopping centre management specialist Donaldsons. DTZ's shares are rated higher than shares in UK rival Savills. But with further bad news a distinct possibility, now is the time to sell.

Latin American miner Yamana Gold, boasts a fantastic cost base and with production and reserves growing, its shares are cheap compared with its peers. Despite difficulty in dealing its shares, Yamana mines its gold for less than nothing and its production is likely to rise significantly in the coming years. Buy.

THURSDAY

The Telegraph

The energy market remains strong and John Wood Group, a £2.5bn energy company, is experiencing positive momentum. Since November, shares have surged in line with soaring oil prices and so Wood Group is an attractive business. With few signs of oil coming back from $140 a barrel, it seems unlikely that oil companies will be forced to cut back on their spending. There is still plenty of mileage here. Buy.

Indian Film Company, which floated on Aim in June last year at 100p, said its film Welcome has become the third-largest box office success of any Indian film and the industry is expected to continue delivering 'double-digit annual growth' this year. The company has a strong pipeline of films ahead. However, the appetite for Aim companies is lacking at the moment. For now, the shares are worth avoiding. Avoid

The Times

Balfour Beatty's tapping of shareholders in May for £186m did not prove popular. Within days shares in the contractor had fallen nearly 9% from pre-placing price. But Balfour's position has now improved and yesterday's update proved reassuring. Trading remains strong, prospects in rail are better, the group order book has risen to £11.8bn and they're on course to deliver a 13% rise in earnings this year. Hold.

London Capital Group (LCG), which owns Capital Spreads, said yesterday that first-half pretax profits would be significantly ahead of original forecasts, or about 50% higher than last year. LCG is making steady progress in signing “white label” deals, and it has also made its first acquisition in three years. Another attraction is a lack of debt but customers would fall if a severe bear market persists. Hold.

Shares Magazine

The pharmaceuticals sector has crept up to 14th out of 47 in the FTSE indices and AstraZeneca is a good way of playing the sector's improving momentum. AstraZeneca is one of the world's leading pharmaceutical companies with an annual research budget of over $5m and now has 10 projects in Phase III development. A $2bn restructuring program is well underway. Buy.

Pressure Technologies design and make the equipment needed to extract oil & gas two miles below sea, and they're prospering. Sales were up 60% at £11.7m and profits have soared 143% to £2.4m. The order book stands at £18m, with plenty of large tenders still to come and demand is so high, the waiting list has lengthened to six months. With humungous growth prospects, the shares have far to go. Buy.

Wednesday

The Times

Northgate, the largest van rental operator in the UK and Spain, tabled a private equity share offer of 12p in 2006. Since then its shares have fallen more than 70%. They dropped a further 4% yesterday after the company cautioned that current-year pre-tax profits will be roughly the same as the £83m just reported for the 12 months to April 30. Surging fuel prices and financial gearing are likely to overshadow the shares, which at 338¾p, or four times 2009 earnings and yielding 8.3%, look superficially cheap. Sell.

A month after the world's third-richest man, Bill Gates, took a minority stake in Carpetright through his Cascade investment vehicle, shares in the retail chain have fallen nearly 20%. At 619½p, or 11 times current-year earnings, the shares owe their premium to Carpetright's strong balance sheet and 52p-a-share payout – giving a yield of 8.4% – which should be maintained. Sell.

The Daily Telegraph

JP Morgan has just cut its price target on the Yellow Pages company by a whopping 418p to 92p. With the shares down more than two thirds since early March this year - when they were changing hands for 200p - investors are very nervous. But the shares, trading on 1.6pc times forecast earnings, yielding an unlikely 12.9% will continue to trade on a massive discount to the sector until action is taken.Hold.

Morgan Sindall, the construction and office fit-out group, has seen its share price savaged by 40% in recent weeks. The recent tumble means the shares are trading at just 6.4 times forecast earnings, while the group is yielding close to 6%. On these grounds, Questor thinks the sell-off - if not overdone - is at least well cooked. Hold.

MONDAY

Daily Telegraph

Trinity Mirror warned yesterday that full-year operating profits would be 10% lower than forecast. We expect more bad news from Trinity at half-year results on July 31. The view is that while media stocks are the first to be discounted in a downturn, they also bounce back faster than other sectors. For now, newspaper stocks are at best a hold, in line with chief executive Sly Bailey's profit warning predictions. Hold.

Forth Ports has a £790m market value and around £260m debts. The company combines seven UK ports, including Tilbury and a landbank of waterfront property. On the face of it, shares look expensive, but that's not how Forth should be valued. Put the ports on the average 14.5 times and the shares are worth £25.20. Even if the next calculation of worth for the property is slashed 25%, that drops to £23. For patient investors, the shares are a buy. Buy.

The Times

Shares in energy company Drax have surged 37% over the past three months and current year operating profits are likely to be 'modestly' ahead of the £400m forecast. Further, Drax confirmed that is has surplus cash of £100m, which it will return through a dividend. At 739p, or nine times 2008 earnings, and yielding 7%, Drax remains a bet on the relative movements of gas and coal prices. However, after its recent run, there will be better times to buy. Hold.

The 30% jump in full-year revenues and profits by Clapham House may surprise some, given their profit warning in December. But the huge potential of Gourbet Burger Kitchen scarcely suggests a company in crisis. Even after a few glitches with its Tootsies brand, this remains a strong business. Clapham House is valued at £56m, including debt. But break-up value is modest for a company whose earnings should rise 30% this year. Hold.