Newspaper and magazine share tips

By Lee Boyce
Updated: 06:09 EDT, 4 February 2011

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: The latest share tips from national newspapers and investment magazines

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FRIDAY

The Daily Telegraph

Both the bulls and the bears took heart from Unilever's full-year numbers yesterday. The bulls were in charge at the open before the bears sent the shares lower later in the session. Questor remains in the bull camp. The big positive was in terms of volumes. Organic growth was 5.1% in the fourth quarter of last rear, which is above the top end of the range of analysts' expectations. The shares trade on a 2011 multiple of 13.3 times, falling to 12.3 times in 2012. Yielding 4.1%, the shares are a buy for their emerging markets exposure and delivery on the group's strategy.

Compass, the catering group that serves 4bn meals a year globally and 270m cups of coffee each year in the US alone, posted a positive first-quarter update yesterday. Like-for-like sales in the three months to December rose 5.5% - a strong performance. The shares are trading on a September 2011 earnings multiple of 14.4 and yielding 3.4%. Compass shares were first tipped at 306.25p on November 30, 2008, as a defensive play in turbulent times. The shares are up 84% since then. Buy.

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Investors Chronicle

It seems a bit unfair to pick on Stagecoach. If profit margins are a guide, it's Britain's best-run bust company. Yet Stagecoach's privileged market position means it has more than other operators to lose from change. And the status quo – characterized by fuel rebates, subsidized fares and double-digit profit margins – looks fragile. Stagecoach's dividend yield at 3.3% is nothing special compared with other transport groups. Sell.

Quantity surveyor and property consultant Cyril Sweett transformed its prospects last year with the acquisition of Widnell, Asia Pacific's third-largest quantity surveyor, which has a rapidly growing franchise in China. The Widnell acquisition is not reflected in its share price. Sweett has unrealised value in its UK investment portfolio, but the lack of neatly-comparable companies makes a valuation tricky. However its looks like an attractive growth proposition. Buy.

The Times

There was a time when a financial update from Lonrho was a significant event. The company was a huge conglomerate straddling Africa with interests in transport, agriculture and hotels. Most who knew it then probably assume it no longer exists, the platinum mining interests are owned today by Lonmin. Turnover in the year for the company to the end of September was £107m, set to rise to about £200m this financial year. This is a good way of investing in fast-growth African markets, though perhaps not one for the widows and orphans. Risky buy.

Globalisation sometimes throws up some odd trends. Unilever reports that tea sales, driven by its Lipton brand, were particularly strong in India and China, surely the consumer goods equivalent of shipping coals to Newcastle or sand to Saudi Arabia. The shares have underperformed the sector and are on about a 10% discount to the average, n about 13.5 times this year's earnings and yielding about 3.8%. They look to be a good play on emerging markets, even if short-term worries may affect sentiment. Buy.

The Independent

The story of GlaxoSmithKline's annual results is a lesson in the art of managing expectations. The headline figures were less than cheery – the drug maker booked a fourth-quarter loss of 7.5p per share before major restructuring, against forecasts of 6p per share – but the stock firmed up, despite yesterday's falling market. The combination of the recent weakness in the share price – it was down nearly 9% over January – the share buyback and the promise of future growth make GSK a solid buy.

For potential investors in environmental consultancy RPS Group, now is a time for patience. An update from the company forecast full-year results in March in line with expectations. But it also outlines a potentially serious hit to the group's Australian business. The division has already been 'seriously disrupted' by the Queensland floods. We'd hold off for now.

THURSDAY

Shares Magazine

The sell-off in RBS on break-up fears and the Irish debt crisis looks overdone. Investors should take the opportunity to buy into a recovery driven in the medium-term by rising interest rates in the UK and an improvement in its often-overlooked US operations. With inflation measured by the CPI running at 3.7% in December, against the Bank of England's 2% target, we would expect an increase in UK interest rates from 0.5% in the second half of the year. A 25 basis point rise in base rates would lift the group's net interest margin by around 6 basis points and add £400m to operating profits. Buy.

Risk-tolerant investors should look to buy Angel Biotechnology ahead of a maiden pre-tax profit announcement for the full year. In addition, the shares should receive a boost from news of further contract wins from pharmaceutical and biotech firms in need of access to Angel's innovative technology. Angel specialises in producing advanced biologics, such as stem cells and cellular vaccines, for clients under contract. House broker Matrix say: 'From 2012 we expect strong sustainable profitability for the business with excellent cash generation.' Buy.

Daily Telegraph

A few weeks ago, Citigroup said it believed that smoking could 'virtually disappear' in Britain by 2050. Results from Imperial Tobacco yesterday, however, showed there's still life in the sector yet. In a surprise move, Imperial Tobacco upgraded its dividend policy yesterday, making the shares even more attractive for income seekers. Sales growth came in ahead of expectations too. The shares were first recommended as a buy on November 30, 2008, at £16.18 a share. They are now up 18% compared with a market up 39%. The shares remain a buy for income seekers.

Shares in inter-dealer broker Icap have performed very well of late – rising 17% since Questor last said hold in December. Yesterday's update was generally positive, although there was some caution in the statement regarding some of its operations. However, the company still expects to meet forecasts for the current year to March. This means that pre-tax profits will come in somewhere in the £333m to £357m range. After a period of strong share price performance, the rating remains hold.

The Independent

Imperial Tobacco, the maker of Lambert & Butler and Golden Virginia said its combined cigarette and fine-cut tobacco sales volumes rose by 1.2% in its first quarter to 31 December, driven by strong performances in Eastern Europe, Africa and the Middle East, and Asia Pacific. This growth represented a rebound from the 2.9% decline in volumes for the first year to the end of September. The FTSE 100-listed tobacco maker trades on a forward earnings multiple of just 9.5 times. Buy.

Sage provides business management software and services to help small and medium-sized companies get on with running their operations. The group gave a bullish first-quarter update last month, which revealed that small companies were still spending on IT and revenues were growing. The long-term picture looks good, but margins are expected to be fairly flat this year. Valued at 14 times forward earnings, Sage looks well priced. Hold for now, but this could evolve into a buy depending on the success of the new strategy.

The Times

It is tempted to suspect that those brokers that took a negative view of Icap's trading statement did so as an excuse to drum up business by urging a little profit-taking. This might be understandable if only because the shares are up by 58% since early may and a little profit-taking was probably in order. Icap's shares, one less than 14 times this year's earnings, are probably due a break, but remain a long-term hold.

There has been a shortage of good news for investors in Imperial Tobacco and other cigarette makers. Shares in the sector were hit recently by claims that the habit could die out within 40 years. There is little sign of that in Imperial's figures. Imperial plans to raise the ratio of earnings paid out in dividends from 47% last year to 50%. This suggests dividends this year of about 97p a share and a yield of about 5.1%, and there is always the possibility of share buybacks. Nice income if you can get it. Buy.

WEDNESDAY

Daily Telegraph

Food group Cranswick posted a sizzling update yesterday, with like-for-like sales in the third quarter rising 5%. However, shares in the company specializing in pork products fell 3% at the open, before recovering some of the losses. The company has been investing in new state-of-the art facilities that can respond to fluctuating demand. Its processing site in Hull was completed before Christmas and a bacon factory in Leeds is being commissioned. The shares are trading on a March 2011 earnings multiple of 11.4 times, falling to 10.7 in 2012. Questor believes yesterday's fall provides a good opportunity to buy into this well-managed company.

Despite a 40% leap in the price of corn, food ingredient group Tate & Lyle achieved slightly higher margins on its annual fixed-price corn sugar contracts. It is welcome news to see the company is able to pass on these rising costs to its customers. The group said in yesterday's update it expected to meet its full-year expectations. However, the shares fell because there was some market expectation that the group would be able to use the corn price to push prices higher. The yield at the current price is 4.4%, which is not bad, but the rating remains hold, despite M&A takeover talk.

The Times

Autonomy should not be a difficult company to understand. It sells sophisticated software that finds patterns in huge stores of data, for example allowing governments to track terrorists and marketing departments to be more efficient. Profits are then booked comparatively conservatively and results are announced on a quarterly basis. But the City has had huge problems grasping this and over the past year the share price has veered from almost £20 in mid-June to below £13 in November. The shares are one less than 20 times' this year's earnings and are a good long-term bet. But don't expect the ride to be an easy one. Risky buy.

If you can see the geotextiles made by Low & Bonar, they aren't doing their job. The company best known of its artificial playing surfaces, about 10% of the business these days, has a quarter of the business tied up in clever plastic meshes with uses in civil engineering such as lining for roads and railways, water containment and coastal defences. Numis Securities, the house broker, expects Low & Bonar to report pre-tax profits of £18.4m next Tuesday, which would put the shares on 12 times' last year's earnings. One to tuck away for future growth. Buy.

The Independent

Hikma Pharmaceuticals has had a rough few days. Just two weeks ago, its shares were worth around 900p. But after declining steadily over the course of last week, they were changing hands at only slightly above 800p by the close on Monday. They regained some ground yesterday but Hikma remains well below its January peak. The losses stem from the unrest in North Africa and the threat of further upheaval in the Middle East. Signs that the situation is getting worse will, we fear, trigger further profit taking in this stock, which is up more than 50% since the beginning of last year. Sell.

Carpetright yesterday issued a profits warning on the same day that the Bank of England revealed mortgage approvals had hit a 21-month low. While sales have improved since Christmas, like-for-like sales in the UK and Ireland fell by 7.7% for the quarter to 29 January. Carpetright's shares look decidedly toppy, trading on a forward earnings multiple of 33.8 times this year and 24.9 for 2012. For this reason, a hibernating consumer and a stagnant outlook for housing transactions, we think Carpetright has further to fall. Sell.

TUESDAY

Daily Telegraph

An update from construction and outsourcing group Carillion yesterday showed a good level of recent contract wins and a 'positive' start to 2011. This underpins what could be a very successful couple of years for the group – especially internationally. The company detailed orders worth about £350m. Carillion said it will have net cash of about £100m at the end of the year, which is higher than analysts had anticipated. The shares are trading on a December 2010 earnings multiple of 9.7 times, falling to 9.2 next year, which is a discount to peers. The yield is an attractive 4%. Buy.

Construction group Amec, has refocused its business to higher-margin sectors. In Amec's case these are the energy and mining services. Yesterday, it was revealed that the company has won a £140m contract with BG Group to provide services for all of its facilities in the central North Sea. Amec shares underperformed the wider sector last year. The shares had a total shareholder return (capital gains plus dividends) of 48% in 2010 compared with the sector average of 54%, as analysts cut their earnings forecast for 2011. Amec said last year that its order book stood at £3.1bn and it expected a margin of about 9%. Buy.

The Independent

Investors raised a glass to Greene King yesterday after the pub brewing company delivered bullish trading, boosted by tasty food sales. The operator of the Old English Inns also reinforced its focus on pub food by acquiring Cloverleaf Restaurants. For the 38 weeks to 23 January, Greene King's underlying retail sales rose by 3.9%. More significantly, its retail division expects margins to be 'slightly ahead of last year.' Overall, Greene King has proved itself in terms of its balance sheet and profit growth to have a model for all seasons. Buy.

The last time we looked at RPC Group, it had posted a trading statement showing gains in revenues, sales and prices. Yesterday's update continued the trend, with the plastic packaging supplier reporting higher third quarter results thanks to growth in the personal care and coffee capsule sectors. Revenues were boosted by the improved volumes and higher prices as rising polymer costs were passed on to customers. Beyond the strengths of the business, investors should look closely at the valuation, which remains unquestionably thin. Buy.

The Times

The Times today focuses on the Egypt situations impact on companies. The two travel companies most affected are the two biggest, TUI Travel and Thomas Cook. Thomas Cook and TUI, according to a note from Credit Suisse, carry about 900,000 and a million passengers a year to Egypt, about 5 or 6% of their mainstream custom. One analyst, estimated that the complete loss of both seasons could cost TUI £50m and Thomas Cook £30m.

Several banks, including HSBC and Barclays, have strong historic links with the country, where all bank branches hae been closed for the past couple of days. HSBC is the biggest, but profits account for less than 1% of the group total. Vodafone has a substantial operation in Egypt, 55% owned and with 28m customers, accounting for £1.35bn of a total of £44.5bn in the year to March 2010.

Other companies that could be impacted are Centamin, BP, BG Group and Hikma Pharmaceuticals.