Newspaper and magazine share tips



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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Investors Chronicle

First Quantum Minerals (FQM) has enjoyed one of the biggest growths in the copper mining business. The copper production market is in global supply deficit this year with demand from the industrialising world outweighing the growth in supply. Developments mean that by 2018 FQM could be delivering three times their current output. This would place them in the top four global producers. While viewed principally as a long-term buy, near-term earnings and cash flow are also high due to the current positive pricing environment. FQM's earnings are estimated as moving 15% higher for every 10% in the copper price, meaning cash profits could triple in 2011. Although shares trade on the London market, the Toronto Exchange is more liquid and so could provide a more attractive purchase. Buy.

In 2010, Tui Travel suffered the consequences of the ash cloud, poor trading and an accounting gaffe. The winter has brought improvements but trading is likely to suffer further. Since Tunisia and Egypt have become popular tourist destinations, the disruption in both countries will be costly. Compared to the £104m cost of the volcanic ash cloud, it accounts for little but still signifies the influence unpredictable events have on tour operator's profits. Today few travellers book holidays far in advance meaning the operators are left to sell late in the season when they must cut prices. Thin margins across the industry mean profits must take an immediate hit. While Tui reported a 6% rise in revenue in 2010, there are serious fears for the UK market this year. It's increasing difficult to justify the price given its inferior margins and the difficulties it faces. Sell.

The Telegraph

Defence giant BAE Systems revenues have fallen in the current year, but the effects of efficiency measures are expected to bring a profit rise. The 2010 figures were strong considering the difficulties faced. In the 12 months to December 31, pre-tax profits recovered to £1.4bn from £266m. The profit jump is due to a number of charges in 2009. Possible buy-backs would offer a boost for shareholders. Also, profits will also be boosted by the group's moves to cut costs. Shares are trading on a December 2010 earnings multiple of 7.9 times, falling to 7.7 next year. Tipped at the beginning of last year, they are now 5% below the recommendation price compared with a FTSE 100 up to 10%. Buy.

Oil group, Regal Petroleum, was originally backed by Questor. They now regret Regal to have been a bad investment. The company had many difficulties with its licensing in Ukraine and shares are down an unimpressive 54%. The figures are low despite being in a bid situation. The closing date for this offer is Sunday. Problems with licences in Ukraine have caused share prices to plunge. Energees Investments has offered 38p a share with plans for obtaining a 70% stake in the group. This offer has been recommended by the board. As the company plans to retain a listing in London, many investors have decided to wait for the situation to develop. Sell.

The Times

Cable and Wireless Worldwide report on their third quarter saw business in line with expectations. The company is still winning contracts in the UK, the public sector and retaining work globally. Worldwide, the part of the old Cable and Wireless empire that provides telecoms services to businesses and gets three quarters of its revenues from the UK, put a profits warning out in July, closely following the March demerger. This was an effect of the public spending cuts on its work with local authorities and government departments. Yesterday's statement reassured against further examples of this. It also signalled a rise in the share price from 2p to 75.5p yesterday. If the promised 5.4% dividend for the year is maintained this would offer strong support to the shares. Otherwise they would trade at a lowly ratio of 8 times this year's earnings. It is likely that the dividend will be maintained. Hold.


Shares magazine

A big player in the private equity scene, SVG Capital offers a solid investment. On Monday, they reported a 47.1% growth in value during 2010, just under £1bn and shares are selling at 251p. SVG owns a fund management arm that invests in private equity funds. They also have a portfolio of investment business, which increased by £362.6m in 2010. On the downside, Monday saw SVG cut its holding in fashion chain New Look by half, following a £1.7bn flotation last year. That said, the SVG share price is expected to gain strength from their investment portfolio and growth to the balance sheet. Buy.

Vietnam Holding, the closed-ended fund, has seen a 24% gain in the last six months but still trades at a 17% discount to its net asset value at $1.37 per share. Buying into the fund brings exposure to Vietnam, Asia's second most dynamic economy. However, in the second half of 2010, the State Bank of Vietnam's loose monetary policy and a significant expansion in commercial banking increased inflation. Progress is hopeful as the Communist Party of Vietnam has made economic problems a top concern. Improvements should drive up recovery in Vietnam stocks. Vietnam Holding is an attractive option for entering this developing market as they subject potential investments to environmental, social and governance analysis. Buy.


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The Telegraph

Avanti Communications is well placed to exploit the data-hungry era of smartphones and iPads. Through the new business model, Avanti will provide broadband services to telecoms companies. Those companies will then supply homes, business and other institutions. Last November Avanti launched the first super-fast broadband satellite in Europe. Their second satellite will launch in the second quarter of 2012. It will extend their coverage to Africa and the Middle East, a third is being designed. As a high-tech, loss making company, Avanti's shares are volatile. However, the successful launch of the satellite has reduced business risks. Shares are up 30% on last year compared with a 10% market growth. Prices have dropped since the November satellite launch, so now is the time to purchase. Buy.

Western Coal has proved a good investment since tipped eight months ago, with shares rising almost 140%. The current bid situation sees US coal major, Walter Energy, with an offer of C$11.50 (£7.28) a share for the group in a C$3.3bn deal. Western's primary listing is in Canada with a second in the UK. To make a deal, Western must win the approval of its stakeholders and the Supreme Court of British Columbia. A shareholder meeting on March 8 could lead to an approval by April 1. Shares are above the current offer with hopes a rival may emerge. It hasn't and the shares have fallen from their peak. Sell.

The Independent

Game Group is seeking to adapt customers' online purchasing habits. Yesterday they touted growth potential to analysts, promoting the move to more integration between their stores and website. They will invest £15m of expected cost savings in 2011-12 into this strategy. CEO, Ian Shepherd, is 'confident' this will increase profits. While a vital response to customer preferences, Game's update will reduce gross margins and may not be enough to remain competitive in the gaming market. Little upside is seen in Game's shares. Sell.

Morgan Crucible, which provides carbon technology services for the aerospace and space-exploration industries, received an optimistic tip in January. Yesterday's results backed this positive outlook. It raised its final dividend by 11% to 5p, taking its total 2010 payout to 7.7p. The company's pre-tax profits for last year stand at £75.7m and they aim to double these by 2013. While shares are rising at a strong rate, it may be best to wait before taking profits. The growing global economy bodes well for Morgan's products. There is also room for expansion in emerging markets. Hold.

The Times

Millennium and Copthorne Hotels are seeking a new Chief Executive. Richard Hartman announced last May that he wanted to retire by the end of the year, but his position is yet to be filled. Mr Hartman puts this down to interviewees misunderstanding their management model; they own 72 hotels outright and manage another 30 or so. With a foothold in Australia, Tokyo and some large American cities, locations such as New York are still out of M&C's price range. Their ownership model has allowed M&C to recover faster in the recession. Last year's profits before tax were up 47%. Although a strong model, at the current level investors should wait to purchase. Hold.

A recent headline brought a Californian IT company to instant attention: 'NeuroSky Unleashes Mass-Market Brain Control Interface Technology in Europe'. NeuroSky produce headsets that enable you to use your brainwaves to play games. This is touted as a revolutionary new technology that is bound to create interest. Buy.


The Telegraph

Domino's Pizza came out of 2010 with solid figures. The first seven weeks of this trading year have been disappointing though, with sales 4.7% higher compared to an 11% rise in the first six weeks of last year. This has caused shares to fall by 7%. However, underlying operations are still strong. A 73% increase in internet sales and 'imminent' plans for launching apps for the iPad and Android mobiles bode well. 2010 brought record results with a pre-tax profit increase of 27.3% to £38m. Investors will receive a dividend payment of 5.7p on March 31. Shares trade without this payment until February 23, so new buyers have until this date to qualify. Buy.

Pawnbrokers Albemarle and Bond reported uninspiring results yesterday. Pre-tax profits slipped to £10.7m from £10.8m due to investment in new store openings and the hedge against the gold price. Albemarle made £1.7m less than it could have done in the first half of the year due to the gold hedge. Forecasts are for pre-tax profits to be flat over the full year with a rise between 7% and 8% in the year to June 2011. Shares are currently yielding at 3.8%. They have been underperforming since tipped in February 2009. Sell.

The Independent

The UK's largest food manufacturer, Premier Foods, has pared down their product list. They received £387m from the sale of their Quorn business and grocery canning unit. This reduced their net debt from £1.4bn to £900m. Improved profits in its grocery and Hovis breads units were accompanied by bad news in other areas. With its debt burden reduced, Premier is in better shape to reinvest in the lucrative UK grocery sector. Shares only trade on a modest forward earnings ratio of 5.6. However, consumers are still saving and the company faces unresolved problems with its Brookes Avana ready-meal unit. Investors should wait for further signs of improvement. Hold.

IT firm Micro Focus yesterday revealed its loss of some large US deals in its third quarter. They warned of an unlikely recovery from the shortfall in revenues brought by these losses. Annual revenues are expected to fall between $432m and $442m. Adjusted earnings before interest, tax, depreciation and amortisation are expected to range between $159m and $167m. They will incur a restructuring charge of between $14m and $18m from plans to cut costs and restructure the business. Stock trades on around 8 times forecast earnings, about 55% discount to the wider sector. Added to the promise of restructuring this makes shares a risky, but attractive, purchase. Buy.

The Times

Spirent were unfortunate in becoming involved in a Wikileaks-inspired row between Beijing and the Americans over the supply of Western technology. It is no longer relevant to today's business and is suggested to have no effect on future profitability. However, the matter will be raised when Spirent releases results for 2010 on March 3. Spirent produces hardware that allows companies to test future products more quickly and efficiently, a very competitive field. The company have $220m in the bank. Their cash balances allow for bigger business purchases, further returns to shareholders, or both. Operating profits before one-offs for last year should be up by about 23% to $125m (£77.5m), according to the house broker RBS, putting the shares on about 20 times' earnings. Hold.


The Times

After a successful sale of their well support division, the John Wood Group is in a good position for new purchases. They have bought PSN, a production services business for $955m (£596m). This will allow at least $1.7bn to be returned to Wood shareholders, working out at 195p a share. Oil and Gas related business accounts for 85% of the group. Founded in the early 1990s, Wood has grown enormously with around $500m invested in it since then. Selling the well support division brought profits of around $128m in 2010. Hold.

Harvey Nash, a global IT recruiter and outsourcer, were pleased with the reductions at the top of Nokia this week. Chief Executive, Albert Ellis, describes this as 'The Apple-Android effect'. Yesterday's trading statement saw a hike in the company's cash position from £5m to £8m. Shareholders will eventually feel the benefits with dividends and other payouts. Harvey Nash is operating in strong growth markets, the staff it supplies will continue to be in demand. However, on almost 11 times this year's earnings, shares may have reached their peak. Sell.

The Telegraph

Chicken magnate Ranjit Boparpan is in competition with Irish Group Greencore for the purchase of Northern Foods. Mr Boparpan is offering formal cash at 73p per share in response to the Greencore bid for an all-share merger. The board are backing Mr Boparpan's deal; cash offers a more attractive buy-out. There is still a chance Greencore will come back with a higher bid, which is why shares are trading higher than the offer price. If Greencore increase their offer it is likely to be in cash, so selling now looks attractive. Also, the world is seeing a bout of food inflation, which could hit margins. Sell.

In just over a year, shares in US equipment hire group Ashtead have risen by almost 130%. The majority of their business is in the US. Companies have been hiring equipment such as diggers and drills instead of facing the large capital cost that comes with buying. This has benefited companies like Ashtead. Shares were tipped at 81.2p at the start of 2010 and they are up 128%. The shares are trading on a current year earnings multiple of 62.6 falling to 32.9 next year. Sell.

The Independent

The Kazakhmys mining group has caused concern since its chairman Vladimir Kim sold part of his stake to the Kazakh government. It was thought the central Asian state could gain further influence in the FTSE 100-listed company if Mr Kim sold more of his shares. Last night, it was reported that he intends to 'retain his current holding (of about 28%) in full'. A Hong Kong listing is on the agenda. This would strengthen the miner's relationship with China, the world's biggest consumer of metals. Investors are encouraged by the results from other miners as higher metal prices are boosting profits. The same results may be expected for Kazakhmys. Buy.

Titan Europe, which produces wheels, undercarriages and assemblies for 'off-road vehicles' were tipped as a swift sell in 2009. September's upbeat trading statement, followed by another yesterday, has reinstated Titan as an attractive investment. Their full-year forecasts have been confirmed at £355m, some £7m ahead of market predictions. The stock rose to 14% in January before falling back again. This dip is temporary so now is the time for purchase. Buy.