| Buy | |||
|---|---|---|---|
| Company | Publication | Reason | Price tipped |
|
Bellway (BWY) Household goods and home construction |
The Independent | The construction firm trades at a significant discount to peers given a net asset value forecast of 921p per share for 2012. The stock looks cheap for now. | 698.5p 753p/511p |
|
Britvic (BVIC) Beverages |
The Independent | Shares in the drinks maker look undervalued – it trades on a p/e of just eight for the full year, with a whopping yield of 6%. The shares are at a 45% discount to international peers. | 328p 503.5p/290 |
|
Character Group (CCT) Aim |
Shares | The toys and games group’s p/e of 6.2 does not reflect its products’ appeal nor the potential for earnings upgrades, boosted by international sales. A 3.7% yield is attractive. | 158p 215.5p/138p |
|
City of London Group (CIN) Financial services |
The Independent | The investment group has fallen 22% this year. But as this fledgling business shows its worth, hitch a ride now before bigger investors notice. Not a share for the faint-hearted, though. | 69.5p 96p/68.25p |
|
Cranswick (CWK) Food producers |
Shares | The meat producer looks good value following the summer’s profit warning. Declining pork prices should rescue fallen margins. A p/e of 10.8 looks low ahead of a likely re-rating. | 685p 895p/588.5p |
|
Debenhams (DEB) General retailer |
Investors Chronicle | Strong results from its Danish subsidiary boosted this retailer, which continues to revamp UK stores. An increased focus on higher margin ranges should boost returns by 15%-20%. | 67p 79p/50p |
|
Go-Ahead Group (GOG) Travel and leisure |
The Sunday Telegraph | The bus and train operator didn’t win a key franchise, which was only a 17-month contract. The 2012 p/e of 10.4 is not too stretched, but this is primarily a buy for the yield of 5.7%. | 1,398p 1,598p/1,203p |
|
iDesign (IDG) Aim |
Shares | The advertising software group is seeing good growth among key clients in the UK and Europe. Expected to break even this year, it has the potential for broker upgrades. | 59.5p 64.5p/19p |
|
InterContinental Hotels (IHG) Travel and leisure |
The Independent | The hotel chain’s US arm is performing strongly despite tepid economic growth. Still a buy on a forward p/e of eight, the shares are likely to rebound. | 1,124p 1,435p/955p |
|
Interserve (IRV) Support services |
The Independent | This support-services firm works in the right sectors and has pledged to double earnings over five years. Undervalued on a p/e of 6.6, it offers a safe-looking yield of 6.2%. | 309p 341p/183.5p |
|
iDesign (LID) Aim |
Shares | The healthcare kit supplier has enjoyed an 18% sales boost, and should see stronger full-year figures as losses are reduced. A break-even is expected in the second half of the year. | 12.5p 20.75p/12p |
|
Optos (OPTS) Healthcare equipment and services |
Shares | Strong sales and new product launches mean this eye-testing firm looks set to deliver 20% margin and revenue growth in the medium term. A p/e of less than nine looks too cheap. | 183.25p 209p/96.5p |
|
Petrofac (PFC) Oil equipment and services |
The Independent | Energy looks to be a defensive sector at the moment as oil seems set to head higher in the coming months. A forward p/e of 11.9 suggests Petrofac is not expensive. | 1,313p 1,685p/1,108p |
|
Petrofac (PFC) Oil equipment and services |
The Times | This oil company is going back into the North Sea for the first time since spinning off EnQuest last year. The stock is down 18% since May; buy for the long term. | 1,313p 1,685p/1,108p |
|
Plexus Holdings (POS) Oil equipment and services |
Investors Chronicle | Growing industry recognition of Plexus’s unique wellhead equipment is translating into cash. An expanding order book, high margins and strong profits are all encouraging. | 70p 81p/49p |
|
Promethean World (PRW) Technology hardware and equipment |
The Times | A deal with the Mexican government takes this tech firm up the food chain. Although “a full recovery could be a while off yet”, and profits are flat, the p/e is only nine. | 51p 116p/44.5p |
|
Redefine International (RDF) Real estate investment and services |
Investors Chronicle | A fat dividend yield of 11% and a nice rental yield make this property firm attractive despite a debt-refinancing this year. The recent merger should strengthen its balance sheet. | 40p 60p/38p |
|
Regenersis (RGS) Aim |
The Mail on Sunday | The electronics repair group looks set to benefit from our love of gadgets and higher sales to customers. Its focus on the most profitable market sectors is attractive. | 77.25p 85p/41.75p |
|
Tate & Lyle (TATE) Food producers |
Shares | Upcoming half-year numbers should prompt profit upgrades from the corn-syrup producer. A forward p/e of 12.5 looks undemanding, supported by a 3.9% yield. | 639.5p 656p/490.25p |
|
Xstrata (XTA) Mining |
The Times | The miner has lost 40% of its share price since April’s peak and the third-quarter production report didn’t impress. Nonetheless, a p/e of 5.5 means the shares are good value. | 936.5p 1,537p/764p |
| Sell | |||
| Company | Publication | Reason | Price tipped |
|
Berendsen (BRSN) Support services |
Investors Chronicle | The laundry service group has high fixed costs and is exposed to vulnerable consumers. A rating of ten times earnings for this year and next looks high compared to peers. | 439p 569p/391p |
|
BowLeven (BLVN) Aim |
The Times | This West Africa-based oil explorer delivered promising drilling reports – the shares jumped 60%. Still, there is a long way to go, so widows and orphans should avoid. | 109.5p 398p/75.75p |
|
Fuller, Smith & Turner (FSTA) Travel and leisure |
The Times | After buying no new pubs last year, this group recently added five new sites in a £16m deal, bringing the total estate to 365. But a p/e of 17 is high enough in difficult times. | 677.5p 715p/582.5p |
|
Punch Taverns (PUB) Travel and leisure |
Investors Chronicle | Despite decent results, obstacles remain for this pub group. Negative consumer sentiment is likely to hamper the stock. High net debt remains a key concern. | 10p 17.75p/8.75p |
|
Soco International (SIA) Oil and gas producers |
Investors Chronicle | Technical difficulties and a deteriorating outlook for the oil price will hold back this share. It is doubtful whether Soco can ramp up production as quickly as expected. | 334p 414p/253p |
|
TalkTalk (TALK) Fixed line telecommunications |
Shares | The telecoms group faces a possible third fine in a year from the regulator, Ofcom. Its criticism could spark customer losses in what is already a cut-throat price war. | 132p 168.25p/120p |