| Buy | |||
|---|---|---|---|
| Company | Publication | Reason | Price tipped/ 52-wk high/low |
|
Admiral (ADM) Non-life insurance |
The Mail on Sunday | Admiral warned of lower profits last month as injury claims rose. However, directors have piled in – you should bag a few shares at current depressed levels too. | 800.5p 1,754p/786p* |
|
Anite (AIE) Software/computer services |
Shares | This telecoms testing specialist should continue beating expectations, following a 33% rise in revenues. A forward price/earnings (p/e) ratio of 10.8 is conservative. | 85.5p 89.5p/55.5p |
|
Ascent Resources (AST) Aim |
Shares | This small-cap energy group is experiencing strong momentum following good results from a flow test in Slovenia. It deserves a re-rating as the market catches up with its potential. | 2.75p 9.25p/1.5p |
|
AstraZeneca (AZN) Pharmaceuticals and biotechnology |
The Times | This pharma group lacks a compelling research pipeline, but its recent acquisition of a maker of generic drugs should compensate. It’s worth a punt on a forward p/e of six. | 2,924p 3,194p/2,568p |
|
BG Group (ADM) Oil and gas producers |
The Sunday Telegraph | Strong fundamentals at this energy firm have attracted interest. A stake may be sold soon. New liquefied natural gas contracts should add value over the next year. | 1,348p 1,562p/1,144p |
|
Brewin Dolphin (BRW) Financial services |
Investors Chronicle | Underlying performance at this broker remains impressive. Funds under management grew a steady 3.4% in the past year. A 5.3% yield is attractive. Buy. | 135p 185.5p/113.75p |
|
Burford Capital (BUR) Aim |
The Independent | This financer of litigation has increased its exposure to the British market alongside its American business. “Litigation seems to grow like Japanese knotweed.” Buy. | 123.5p 133.5p/106.5p |
|
Cairn Energy (CNE) Oil and gas producers |
The Times | It has been hit and miss for this energy firm lately. But it still boasts big interests in in India and there is unrecognised value in Greenland. Buy if you are feeling brave. | 277.75p 469.75p/261p |
|
GKN (GKN) Automobiles and parts |
Investors Chronicle | A feared slump in car sales is unfounded, and aerospace profits look set to take off. A director has just bought shares and it’s a good buy on just eight times forward earnings. | 191p 245p/157p |
|
Idox (IDOX) Aim |
Shares | The document management specialist continues to defy sceptics despite its public sector exposure. Full-year orders should come in ahead of last year. It’s worth buying. | 25.5p 27p/13.75p |
|
London Stock Exchange (LSE) Financial Services sector |
The Independent | LSE recently bought Pearson out of the FTSE International, which gives it more control over the index provider and enables a move into the derivatives business. Buy on a 3.6% yield. | 780p 1,089p/634.5p |
|
Medicx (MXF) Real estate investment and services |
Investors Chronicle | On a 7% yield, this property firm’s dividends are among the most reliable, as it rents mainly to doctors’ surgeries. This focus bodes well ahead of NHS reforms. | 75p 80p/71p |
|
MicroFocus (MCRO) Software/computer services |
Investors Chronicle | The mainframe modernisation specialist surprised with a good set of recent numbers. A special dividend signalled that the recovery may be on its way. It’s cheap on a p/e of ten. | 404p 426p/239.5p |
|
Moss Bros (MOSB) General retailers |
Shares | Buy the suit specialist ahead of a trading update, as the group should reassure the market of ongoing progress in its restructuring. Online sales have good scope for growth. | 32p 40p/23.75p |
|
Netcall (NET)
Aim |
Shares | The call-centre specialist is finally starting to extract value from past acquisitions and deliver good organic growth. It trades on a p/e of less than six, and offers a 3.1% yield. | 16p 20.75p/11.5p |
|
Stagecoach (SGC) Travel and leisure |
The Times | The transport group has overcome rising fuel prices and the troublesome economic backdrop to deliver good numbers. Buy on a p/e of ten and a 3% yield. | 265.5p 335.5p/238p |
|
SQS (SQS) Aim |
Shares | This IT testing group looks a bargain after it secured its largest contract yet, worth €20m. January’s update should confirm solid trading ahead of a possible re-rating. | 155p 243p/148.5p |
|
Telford Homes (TEF) Aim |
Shares | The strong London property market should drive a substantial re-rating next year as the stock is currently trading at a 45% discount to net asset value. That’s excessive: buy. | 74p 84.5p/56p |
|
Tesco (TSCO) Food and drug retailers |
The Daily Telegraph | Like-for-like sales fell in the last quarter – a price-cutting strategy is not working. However, if inflation falls, the food retailer will be well placed. It’s good value too on a p/e of ten. | 397.25p 439p/356p |
|
Ultra Electronics (ULE) Aerospace and defence |
Investors Chronicle | This defence group was punished by the government spending review. But exposure to high-growth technology makes it worth buying. There is also takeover potential. | 1,459p 1,854p/1,265p |
|
Quercus Publishing (QUPP) Plus |
Investors Chronicle | The publisher’s shares should regain momentum once the English-language film versions of its Millennium trilogy are released. Buy on a p/e of four. | 105p 150p/105p |
| SELL | |||
| Company | Publication | Reason | Price tipped/ 52-wk high/low |
|
EasyJet (EZJ) Travel and leisure |
The Times | Despite a 3.4% rise in passengers in November, the airline looks set to reveal a loss for the six months to March. Efforts to move upmarket don’t support a p/e of 11. | 379.5p 474p/301p |
|
HSBC (HSBA) Banks |
Investors Chronicle | Sentiment is working against the banks as the crisis deepens. HSBC is highly rated on a p/e of eight and its core Asian market is under pressure. It’s too expensive – sell. | 512p 740p/456p |
|
Mothercare (MTC) General retailers |
Shares | A struggling British business climate is strangling this general retailer. Heavy discounting, coupled with strong competition from supermarkets, spell a gloomy Christmas. | 163p 626.5p/127p |
|
Reckitt Benckiser (RB) Household goods/construction |
The Mail on Sunday | The chairman sold £22.7m worth of this consumer staples stock last month. Fears that the Benckiser family may exit altogether look overdone – but margins are under pressure. | 3,242p 3,648p/3,020p |
|
Thomas Cook (TCG) Travel and leisure |
Investors Chronicle | The odds remain stacked against this travel agency: debt servicing is still a serious unresolved problem and trading is tough. Shareholder value looks threatened. Sell. | 16p 207p/9p |