Newspaper and magazine share tips

By This Is Money
Updated: 10:37 EDT, 15 December 2010

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

Round up: We round up the latest share tips from national newspapers and investment magazines

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WEDNESDAY

The Times

Imagination Technologies, known for their Pure DAB radio and Power VR graphics divisions, have bought Caustic Graphics for £17m. The acquisition comes as part of a plan to develop chips which support 3D graphics for tablet computers and mobile phones, with Imagination having purchased HelloSoft for £30m less than a month ago. The move appears to be going down a treat with investors, as yesterday the stock closed at 380p, which was a 6% increase. A worry for buyers is the diversity of all these acquisitions, and whether their investment will fund 3D graphics chip development, Pure radio or HelloSoft's voiceover internet protocol and wi-fi. Apple, which use Imagination's processors for the iPad, and Intel, both renewed their licenses, increasing sales by 16% to a £44m. Pre tax profit also more than doubled during the first half to £7.7m despite Pure not doing as favourably. Buy.

Lately, Betfair's shares have been all over the place. From their £13 launch price, we saw them hit £15.50, and now they're falling to less than £10 after yesterday's 16% decrease. Half-year figures for its horseracing and poker businesses have been haven't met expectations, as well as criticism over the company's regulatory position can be blamed for the fall in value. The slowing growth of just 1.6% in the last quarter for the company's core operations adds to investor's problems. This seems to continue into the third quarter, which has not been helped by snow impacting on races. Its current slow momentum is off-putting, so avoid for now.

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The Daily Telegraph

The bus and rail sector was rocked this year by concerns over the government's expected decrease in subsidies. However, the Go-Ahead Group sounded reassuring yesterday as it announced their expectations for their first-half operating profits to be higher than first thought, particularly as a result of its rail division. It still kept its original full-year targets though, to allow for general economic uncertainty. The Bus Service Operator Grant, which refunds fuel duty in part, will continue until 2012 and then reduced by 20% over three years. This announcement, as part of the comprehensive Spending Review, was a relief to many in the sector as it expected far greater cuts. It also said that rail prices had the 'go-ahead' to increase 3% above the retail price index (RPI) from 2012 for three years, based on the 4.8% RPI from July. This means that shares are yielding a fair 6.3%. Also, it's rail division Southern is expected to increase half-year revenue by 6% more than last year, as a result of a 4% increase in passenger journeys. Buy.

Business consumables supplier Bunzel expects revenues will rise from 1% to 4% from the year to December, and so do business analysts. The company says margins in the UK have increased 'significantly', even in our sluggish economic landscape. Bunzl are seeing some margin pressure in the US. The company are using the safe method of growth by acquisition – it's unveiled nine acquisitions this year - generally purchasing businesses where the management are looking for an exit strategy to gain a new footprint in new locations and sectors - and it seems to be working. When shares in the company were first offered in December 2008, they were valued at 571p. Now they are worth 25% more, compared with a market increase of 37%. Buy.

The Independent

Label printing business Domino Printing beat City forecasts yesterday by boosting pre-tax profits by 86% yesterday, from 328m to £52m. The year to the end of October marked the company's 32nd consecutive year of rising sales, too. This revenue comes from 60% long-term servicing customers and 40% machine sales. Having this number of long-term customers is also a means of insurance against economic swings. With no debt and yesterday's 20% dividend hike and a third of profits coming from fast-growing Asian markets, the company is a good value buy.

As the Treasury cut spending and moved to outsourced efficiency gains, the idea that Capita and similar companies would feel the benefit seems to have deteriorated. It appears that although more business may be driven towards outsourcers, that business might not be that profitable, says the Independent. Last month, Capita's shares fell to their lowest value in more than a year after warning that second-half sales would be hit by Government cuts. However, at 17 times forecast earnings for 2011 and a yield of 3%, Capita is inexpensive, and although the short-term future of the company is uncertain, hold.

TUESDAY

The Independent

Vodafone's been looking more like the red devil of the high street than bright little ball of fun, thanks to protest group Uncut's public demonstrations in store over it's tax arrangements. But the mobile telecoms company is actually in a good position as its investments in the growth of smartphones and launch of new roaming tariffs look promising. What's more, earlier this month, it was revealed that Verizone Wireless could pay dividends again to parent companies Verizone and Vodafone in 2012. Vodafone could also sell the stake, which is valued at £21.7bn. On 8.7 times estimated full year earnings for 2011 with a rising yield, buy.

Majestic halved its minimum purchase from 12 to six bottles in September 2009 and are all the better for it. The new strategy has grown pre-tax profits by 20 per cent to £7.3m for the half-year to 27 September, by attracting new customers as well as encouraging existing ones to buy from them more often. Online revenues and sales of fine wine have also grown by 20.2%, seeing Majestic's share price almost double in a year. They are currently trading at 18.7 times forecast full-year earnings, and next year there are plans to increase outlets to 250. Hold.

The Times

The old joke about De La Rue is that the company had a licence to print money. That's not a joke its investors would fund funny anymore, given that the banknote printer's share price over recent months has been more suggestive of a company with a license to a operate a fairground ride. The share price has been on the way up, closing at 838.5p compared with its nadir of 549.5p only three weeks ago, mainly from the takeover approach from Oberthur. With hedge funds still on the share register, there could be choppy trading ahead and it would take a brave soul to buy at this level. Avoid for now.

It seems that hardly a day passes without Diageo being to another multibillion-pound takeover. A few weeks ago the rumour was that a £10bn buyout of its Moet Hennessy joint venture with LVMH was on the cards. Then last week the world's biggest drinks company was, in quick succession, tipped as a bidder for Fortune Brands of America's £6bn drinks business and Mey Icki of Turkey. Some observers have been musing over which of the possible acquisitions Diageo would prefer to make. The reality is that its balance sheet and cash generation are so strong that, if it came to it, it could comfortably swallow all three. Hold.

The Daily Telegraph

With a global market and investments in India, as well as various investments in Western markets, 3i Infrastructure Fund shows steady capital growth, an attractive yield and is a long-term investment, says the Telegraph. Stating its aim is to build a portfolio of infrastructure investments across Europe and Asia in particular, it's investment in India is the most significant for future earnings, with a £760m stake in the 3i India Infrastructure Fund. The company's portfolio value showed little change in last month's interim report, but showed a strong performance on income. The fully diluted net asset value per share was 116.8p, but the yield from the portfolio was 4.9%, as income rose from £13.9m to £30.5m. For the first half of last year, the company raised interim payment from 2.2p to 2.86p, with a full-year payment at 5.3p. Buy.

Reckitt Benckiser are looking to India, with the planned purchase of private-owned over-the-counter pharmaceutical company Para Pharma, for £460m, which can also be seen as roughly eight times revenues. The Indian pharmaceutical consumer market is worth approximately $1.8bn and is expected to grow by 20% a year, which makes the high purchase price by Reckitt understandable. In March last year, the shares were tipped at £34.96, and are now 43%, with the market also up by 66%. Trading on a 2011 multiple of 15.7 and yielding 3.3% it should see very good growth over the next decade, buy.