Newspaper share tips: Dairy Crest | WH Smith | Petra Diamonds

| September 28, 2012 | 0 Comments

By
Ciaran Stordy

06:28 EST, 26 September 2012


|

09:44 EST, 28 September 2012

 

We round up the week’s newspaper
share tips, with a focus on Dairy Crest, Aberdeen Asset Management, WH
Smith, Spirent, John Wood Group, Hargreaves Services, Petra Diamonds, Close Brothers, Albemarle Bond, Diageo, Compass, Kingfisher, Central Asia Metals and 3Legs Resources.

Specific company share prices are linked below.


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Friday

The Daily Telegraph

Spirits company Diageo is in talks with United Spirits of India to secure a foothold in the Indian market. Both sell similar amounts of alcohol every year, but with the latter’s only matching 4 per cent of the former’s earnings before interest, tax and amortisation, Diageo would easily help maximise profits at the Indian group.

Shares are trading on a June 2013 earnings multiple of 16.7, falling to 15 and yielding 2.8 per cent. Buy

Compass, global leader in catering, has flourished in a crumbling economy, having almost tripled in size since 2008. Shares are trading on a 2013 earnings multiple of 14.9 and yielding a prospective 3.5 per cent in 2013.

Despite the company’s continuing growth and increase in dividend, the market backdrop puts the catering giant at risk. Hold.

The Times

Retailer Kingfisher has just opened its 1,000th store, in Poland, a country in which they are doing uniquely well. Market forecasts see a rebound in profits despite share value decreasing by 15 per cent since April. Not exactly a ‘raging’ buy, but is worth consideration as a long-term investment.

Central Asia Metals has the solid price of copper to thank for its high cash flow and consistency in performance since the float. It produces at less than $1,900 per tonne and receives around $7,600 per tonne for output. If the price of copper stays high, CAM will continue to grow as it looks to open a second treatment plant in Kazakhstan; buying is strongly recommended for those with belief in the demand for copper.

Shale gas explorer 3Legs Resources has £45million left in the bank after the float in June of last year and reckons its operating area in the Baltic off Poland is extremely promising. The 41.5p shares are nothing compared to their former 190p selves when they first came to the market, but growth is, apparently, on the tip of the horizon.

Wednesday

The Daily Telegraph

Hargreaves Services
shares slumped by a third in May and a further fifth yesterday.
£16million is expected to be lost by the company, along with its Maltby
Colliery and 500 jobs, very soon. However, despite the bad news its
financial performance was difficult to fault: in this year to May
revenues rose almost 25 per cent to £688.3million and pre-tax profits
shot up to a record £43.1million. The dividend for this year is to be
brought to 17.8p in December and prospective dividend yield is 3.7 per
cent.

Because of the
earnings potential of a large portion of the business and the fact that
shares look too cheap at the moment even for a worst-case scenario, Buy.

Petra Diamonds
has taken a heavy plummet in diamond prices on the chin, but the
company’s growth projects look on track. Annual revenues grew 44 per
cent to $316.9million, but higher losses on financial exchange shrunk
$64.4million pre-tax profits to $8.4million. The company wants to start
paying dividends in a few years and this week’s results show an 8 per
cent surge in share value, making them a profitable purchase. Buy.

The Times

Investment bank Close Brothers
has grown consistently by 11 per cent over the past decade and by 20
per cent every year for the last three. Banking profits were up by 27
per cent to £135million, balancing the halving of profits in the
securities sector of last year. The shares reached a value of 845.5p,
putting them at almost 11 times earnings. Further good news may not come
about without the recovery of the firm’s securities sector, however.

The bubble in gold selling is definitely over. The trade hit a peak in March and then fell off sharply. Albemarle Bond,
according to analysts, will be down 30 per cent in growth this year.
Shares are down to 260.5p and sell on about 12 times earnings. There is
little reason to get excited here.

Tuesday

The Daily Telegraph

Dairy Crest is responsible for the distribution of 15 per cent of Britain’s milk and reports ‘strong momentum’ on behalf of its four major brands.

The company also has at its disposal £343million – due to the passing on of its French spreads business, St Hubert – which is a tidy sum with potential of bringing share growth to the company. Dairy Crest is trading on a price/earnings ratio of seven times and offers a dividend yield of more than 6 per cent. Buy.

Aberdeen Asset Management’s long-term performance signals it out as a nice pick for investors. Shares have risen by nearly 83 per cent in the past year and 45 per cent in the year to date. The company’s shares yield 3.11 per cent and are due to rise to 3.41 per cent next year, according to Bloomberg. Earnings per share are at 15.11, expected to drop slightly to 14.61 next year.

Despite the turbulence across financial services sectors at the moment, investing in Aberdeen is regarded as a shrewd decision to make due to its promising finances and potential. Buy.

The Times

WH Smith’s adaptation to a changing high street has merited increased investor confidence. An improvement in efficiency and a focus on securing larger margins has begun to pay dividends. Spread Co. quotes a pleasing 634.99p to 639.99p improvement. It is a good time to get on board.

Spirent is concentrating on testing new communications and IT devices, which explains the sale of its systems division to Bodycote. The disposal of its earlier, low-tech business will earn it $64million. The funds received will be used to reward investors by buying back shares in the market. Shares, off 2p at 160.5p, sell on circa 16 times’ earnings. A good bet for the long-run.

John Wood Group shares returned to the FTSE 100 yesterday after sustaining laudable performance since June. The purchase of an oil services business for $135million has increased its exposure to the American shale oil and gas industry. This will add to earnings and looks like a well-timed move.

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