| Buy | |||
|---|---|---|---|
| Company | Publication | Reason | Price tipped |
|
Adv. Comp. Software (ASW)
Aim |
Shares | The business management software firm grew revenues 10% to £98m and has 57% recurring revenue. The shares are cheaper than rivals on a forward price/earnings (p/e) ratio of 12.4. | 58p/38p* 54p |
|
Ashtead (AHT)
Commercial services |
The Sunday Telegraph | This construction equipment-hire firm is benefiting from a trend towards renting through the downturn. Full-year profits are 6% ahead of expectations. Buy. | 276p/98p 252p |
|
Central Asia Metals (CAML) Mining |
Investors Chronicle | Getting output from this copper miner’s Kazakhstan plant should be simple and cheap, with 5,000 tonnes expected this year and 10,000 next. A 2013 p/e of less than three looks too cheap. | 107p/54p 80p |
|
CLS Holdings (CLI) Real estate |
Investors Chronicle | The property firm is benefiting from an unusually wide gap between rental yields (7%) and the cost of debt (3.8%), and looks cheap at a 36% discount to forecast net asset value (NAV). | 691p/501p 670p |
|
Costain (COST) Engineering and construction |
The Times | The engineering services firm has £100m cash in the bank and its focus on large clients, such as Crossrail, means that 90% of the workload is in repeat orders. Buy on further weakness. | 248p/174p 217p |
|
Domino’s Pizza (DOM) Retail |
Investors Chronicle | Poor weather this year, along with the summer’s sporting events, should help this fast-food chain post healthy figures at 23 July first-half results and could lead to a share-price boost. | 527p/381p 493p |
|
Entertainment One (ETO)
Distribution/wholesale |
Shares | The entertainment distributor has growth prospects in Asia. A 28% fall since December is a buying opportunity on a current year p/e of nine. | 209p/129p 151p |
|
Gulf Keystone (GKP) Oil and gas |
Investors Chronicle | A 60% share-price fall since February looks overplayed as this oil explorer has had success at its Shaikan discovery in Kurdistan. Buy on a 33% discount to NAV. | 450p/87p 168p |
|
H&T Group (HAT)
Retail |
Investors Chronicle | Despite margin pressures in its gold business, this pawnbroker has hit trading estimates and the shares trade at an unwarranted discount to rival Albemarle on a forecast p/e of seven. | 415p/240p 260p |
|
Intl. Pub. Partnerships (INPP) Closed-end fund |
The Daily Telegraph | This infrastructure fund has raised £200m to invest in schools and power transmission. It’s an income play on a prospective yield of 5.2%. | 122p/111p 117p |
|
Liontrust (LIO) Div. financial services |
The Times | Liontrust has grown funds under management from £1bn in 2009 to £2.1bn now and is targeting £7bn in the next few years. It’s a speculative punt on a sector discount p/e of 12.5. | 125p/57p 97p |
|
MDM Engineering (MDM) Engineering and construction |
Investors Chronicle | This Africa-focused mining engineer has had a strong 2012, with a robust cash position and significant project pipeline. A prospective p/e of nine looks undemanding with a yield of 5%. | 149p/93p 146p |
|
Melrose (MRO)
Misc. manufacturing |
The Daily Telegraph | This turnaround firm, which has created £1.5bn of shareholder value since 2003, is in talks over a £1.3bn deal for German firm Elster Group. Buy on a 2012 p/e of 12.1 and yield of 3.5%. | 446p/265p 371p |
|
NCC Group (NCC) Computers |
Shares | Buy this IT testing and security specialist ahead of 5 July finals, as a share-price fall on a botched software project is overplayed and a modest p/e of 14.9 should soon correct itself. | 922p/580p 750p |
|
Real Good Food Co (RGD)
Aim |
The Times | A deal with Mauritian sugar producer Omnicane will help this food wholesaler secure supply and reduce a £25m debt pile. The shares look undemanding on a p/e of eight. Buy. | 74p/34p 57p |
|
Restaurant Group (RTN)
Retail |
Shares | The Frankie & Benny’s owner looks set to pay a special dividend of up to 25p per share within 12 months. Added to the 11.5p ordinary payout, that would mean a yield of 12.5%. Buy. | 313p/238p 292p |
|
Rio Tinto (RIO)
Mining |
The Daily Telegraph | This miner is spending $4.86bn to expand iron-ore production, especially at its Australian Pilbara mine serving the growing Asian market. The shares look cheap on a 2012 p/e of seven. | 4,624p/2,637p 3,095p |
|
Rolls-Royce (RR)
Aerospace/defence |
The Times | This power systems manufacturer has an order book of £62bn, with over half in more steady and visible service contracts. A 2012 p/e of 15 isn’t cheap, but the shares remain attractive. | 868p/519p 840p |
|
Serica Energy (SQZ)
Aim |
Shares | This North Sea oil firm looks undervalued and could benefit from the continued merger and acquisition speculation in the region following purchases by Cairn Energy and Premier Oil. | 47p/14p 23p |
|
Utilitywise (UTW)
Environmental control |
Shares | The energy consultant is benefiting from growing demand to reduce energy costs, with 1,000 new customers every month. Pre-tax profit is forecast to nearly treble between 2012 and 2014. | 64p/60p 62p |
|
Weir Group (WEIR)
Machinery diversified |
The Times | The pump maker’s mining business (52% of 2011’s operating profits) is benefiting from strong aftersales, which could help it hit 2012 forecasts. On a p/e of ten, there should be further to go. | 2,254p/1,332p 1,558p |
| Sell | |||
| Company | Publication | Reason | Price tipped |
|
Home Retail (HOME)
Retail |
Investors Chronicle | Use a 25% share-price rise to sell the Argos and Homebase owner. Good news on Argos looks overplayed and Homebase is facing tough conditions and saw like-for-like sales drop 8.3%. | 167p/68p 93p |
|
Lloyds Banking (LLOY) Banks |
Shares | This bank has £23bn exposure to the five weakest eurozone countries, including £6.5bn to Spain, where bond yields have hit record highs and a default may be on the cards. Sell. | 51p/22p 30p |
|
Mulberry (MUL)
Retail |
The Daily Telegraph | This luxury goods group has rocketed since 2009 and the shares now trade at eye-watering levels on a March 2013 p/e of 27.7. There’s growth potential, but the market looks fickle. Avoid. | 2,500p/1,263p 1,566p |
|
TalkTalk Telecom (TALK)
Telecommunications |
Shares | Broadband price wars and delays to TV service YouView could hinder this telephone and broadband provider’s growth plans and earnings forcasts. Use a 21% three-month gain to sell. | 180p/116p 170p |
|
Vitec (VTC)
Misc. manufacturing |
The Mail on Sunday | Shares in this firm, which makes the high-tech camera equipment used to film football games, have risen 78% since August 2008. Investors should look to sell 50% and take profits. | 700p/488p 660p |
| * 52-week high/low | |||