Newspaper and magazine share tips

By THIS IS MONEY
Updated: 10:11 EDT, 28 April 2011

Round up: The latest share tips from national newspapers and investment magazines

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.

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THURSDAY

Shares Magazine

Document Storage may not seem the most exciting area in which to invest but for Restore the prospect of high levels of repeat revenues and potential earning upgrades make its shares a solid buy at 48.3p. The share price has doubled in price since October 2010. The latest acquisition was made on 11 April where Restore bought document storage group Sargents out of administration for £500,000. The company's £22.2m market value is partly underpinned by £8.5m of freehold property. Further acquisitions are likely to trigger earnings upgrades if Restore repeats its success in buying the right business at the right price. Buy.

Cape shares remain at an attractive valuation for such a compelling growth story. Near-term catalysts for a re-rating include the potential for earnings upgrades off the back of contract wins in the Australian liquefies natural gas (LNG) market and return to the Main Market from Aim before the end of June. Despite these attractions, at 551p and based on a consensus 2011 earnings per share forecast of 45p, the shares trade on an undemanding price/earnings ratio (PE) of 12.2. Demand for LNG is likely to increase in the wake of the tsunami and earthquake in Japan and the resulting nuclear crisis, as the country increases its dependency on LNG. Buy.

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The Daily Telegraph

Yesterday's first-quarter update from temporary power group Aggreko was solid. The company has seen such a strong start to the year that that it has said full-year numbers are likely to be slightly ahead of 2010. In the first quarter of the year revenues were up by 9%. Significantly, revenues at its International Power Projects operation rose 19% in the quarter. Aggreko plans to increase the rate of its fleet capital expenditure in the second half by about £70m, and to send around £390m across the group as a whole during 2011. This is good news as it shows the company is confident about the rest of the year. Buy.

One analyst today called BP's political misread in Russia a schoolboy error. This situation has created a cloud of uncertainty over the shares - but if the deal eventually goes through, exploration in the Arctic will offer significant opportunities. Yesterday BP said that profits had fallen in the first quarter as output dropped. Another negative was falling production. It fell 11% on a year-on-year basis. Still, the valuation is less than peers and if management can sort out the Russia quagmire the shares, trading on a current year earnings multiple of 6.4 times, look good value. Hold.

The Times

A recent study suggests that investment in Australian mining infrastructure by huge miners will be at its highest level ever this year as the industry tries to keep pace with demand from China. Fenner, whose biggest division makes conveyor belts that go into such projects, has already made its own investment, having decided to put in £200m ahead of the recession. Yesterday's interim figures show the benefits of raising capacity and efficiencies at its plant in Australia and elsewhere ahead of the boom. Revenues in real terms in conveyor belting were up by 27% to £235.3m, and margins grew by almost a percentage point. The increase in capacity and efficiency allowed Fenner to turn in a 93% surge in underlying pre-tax profits. Hold.

GlobeOp provides services such as trade processing and funds administration to start-up hedge funds and established players. They listed for 230p a share in 2007, valuing it at £255m, although the whole thing was nearly derailed by a lawsuit by an American client Archeus. The shares are worth 413p today. Assets under administration rose by $18bn to $167bn in the first quarter. Last year's 4p dividend is tipped is tipped to rise to 6p this year, although the yield is a paltry 0.9%. Analysts at Espirito Santo reckon that last year's £45.7m of pre-tax profits will double to £94.8m in three years, so the growth opportunities will be plentiful. Hold.

The Independent

Arm Holdings super-smart chips drive almost every smartphone on the market. Yesterday's trading statement revealed yet another successful quarter for the Cambridge-based company with revenues surprising analysts by rising 26% to £116m year on year. Profits were up 35% to £50.8m. It is winning new clients all the time, and the group's shares lifted earlier this year as Microsoft revealed it would use Arm devices in its devices. The Independent has Arm as one of its stock picks for the year and continues to stand by it even though some analysts believe the growth of the smartphone and tablet industry is priced in. Buy.

With the stock having increased more than 260% over 2009 and 2010, investors in Senior cannot be blamed for feeling a little disappointed that this year has seen the industrial manufacturer fail to push on. Nonetheless, yesterday's interim management statement from the group made for fairly encouraging reading, with the group revealing a better performance over the first three months of 2011 than the same period a year previously. Importantly, in its areas of strength it appears as if things look likely only to get better. Buy.

WEDNESDAY

The Daily Telegraph

North American education is Pearson's largest business with 2010 sales up 7% to £2.6bn. Total revenues in 2010 were £5.66bn. Judging by its acquisition strategy, Pearson seems to be taking the right steps to grow its education business and respond to the US government's plans for education. Its latest bolt-on acquisition of Schoolnet reacts to the US government's increased focus on personalised, computer-based learning. Pearson's other businesses performed well in 2010, even though the physical books market is clearly in decline. Hold.

Some investors will decide that Heritage Oil is worth a punt since the company embarked on a £60m share buy-back, after its market value halved. However, Questor still thinks there's too much risk lingering over the oil explorer. For starters, there is its legal row with the Ugandan government over whether it should pay $404m in taxes on the sale of its Lake Albert fields. Then there's the court case with former partner Tullow over whether Heritage. Avoid.

The Independent

Tesco boasted an impressive 11.3% rise in pre-tax profits to £3.5bn over the year to 26 February. Among other divisions, Tesco's retailing services business alone, which includes telecoms, dot-com and Tesco Bank, grew trading profit to £583m. In moves to further galvanise this division, Tesco Bank is set to launch mortgages later this year. The broad spread of Tesco's operations globally, from China to Turkey, and from selling second-hand cars online to pawn-broking, means that the grocer can afford to suffer the odd bump in the road without the juggernaut being derailed. Tesco's shares trade on a modest forward earnings multiple of 11.5 after falling substantially over the last year. Buy.

Speedy Hire yesterday announced it has struck a deal to dispose of its accommodation hire unit, selling it to the market leader in this part of the industry – Elliott Group, the UK subsidiary of Algeco Scotsman – for just under £35m. In the last financial year it posted an operating loss of £4.5m, so it's hardly a surprise that speculation about such a move has been rife. Looking at the sums involved, those of a bearish disposition may point out the price being paid represents a significant discount to its net asset value of £52.4m. The proceeds from the sale will be used by Speedy Hire to reduce its debt and invest in more promising areas of the company. Buy.

The Times

The deal by Staffline to acquire Fourstar Employment and Skills, a government contractor that helps the unemployed into work is one of those that has you scratching your head to try to work out where the catch is. Fourstar is one of three Flexible New Deal operators in the Midlands. The coalition Government has scrapped the New Deal in favour of the Work Programme. Fourstar is, though, the preferred bidder for the five year contract, which means that it is virtually guaranteed to get the job. Staffline is paying £3m for a company that made £3.6m in 2010, plus there will be £3m in the bank by June or July generated from trading, so it is getting the business for nothing. Buy.

Maidenhead-based SDL, a company which offers translations in instruction booklets for electronic goods, bought the evocatively named Language Weaver of California for £28.2m last summer. About 40% of SDL's revenues are sales of software the rest services to support this. Language weaver is still loss-making but should break even next year as investment goes into the business. The shares, up more than 40% in a year, sell on about 18 times' earnings. Buy.