| BUY | |||
|---|---|---|---|
|
Company
|
Publication |
Reason |
Price tipped |
|
Afren (AFR) |
The Times |
Afren’s prospective assets off east Africa have been upgraded from 2.1 billion barrels to 5.8 billion, while the Kurdistan Barda Rash field started producing in June. It’s attractive, if risky. |
130p |
|
Avon Rubber (AVON) |
Investors Chronicle |
Avon Rubber is a market-leader in defence and dairy, standing it in good stead to expand its markets and develop new products. A price/earnings (p/e) ratio of ten looks too low. |
300p |
|
BHP Billiton (BLT) |
The Daily Telegraph |
Despite a 26% fall in pre-tax profits the miner is highly profitable, has an operating margin of 39% and a full order book. Spending cuts bode well for shareholders. Its June 2013 p/e is 9.5. |
1,951p |
|
Bovis Homes (BVS) |
The Daily Telegraph |
The housebuilder has made cheap land purchases during the downturn, helping boost operating margins from 10% to 12%-13%. A current year p/e of 17.7 falls to 13.5 next year. Buy. |
492p |
|
Carillion (CLLN) |
The Times |
A focus on support services has raised operating margins and lifted profits 69% to £25.9m. A share-price decline opens a decent entry point on a p/e of six, yielding a rock solid 6.7%. |
268p |
|
Cluff Gold (CLF) |
Shares |
After 18 months of underperformance by the sector, the gold miner should benefit from a likely third round of money printing (QE3). Buy ahead of resource upgrades in October. |
69p |
|
Debenhams (DEB) |
Investors Chronicle |
The high-street store has room for growth in Britain and rising online revenue (now 10% of |
94p |
|
Electric Word (ELE) |
The Times |
The specialist publisher has fallen from around 10p in 2007 but could benefit from new healthcare regulation. A one-for-nine placing at 1.5p could be an entry point for a speculative buy. |
1.6p |
|
James Fisher & Sons (FSJ) |
The Daily Telegraph |
The marine services firm’s focus on niche areas, such as submarine rescue, helped boost |
673p |
|
Kenmare Resources (KMR) |
The Times |
Prices are holding up well for the miner’s mineral sands and its Mozambique asset is set to hit capacity late in 2013, boosting operating profits almost 50% against 2012. A speculative buy. |
40p |
|
Mears Group (MER) |
Investors Chronicle |
The social housing and care provider has been winning deals and has a £2.7bn order book covering 85% of 2013 revenues. On a 2012 p/e of less than ten the shares are a buy for growth. |
276p |
|
NCC Group (NCC) |
The Times |
The cyber security specialist is consolidating the US market, and future IT trends, including mobile security, look supportive. A high p/e of 17 is deserved for its long-term prospects. |
884p |
|
New World Resources (NWR) |
Investors Chronicle |
Weak coking coal prices have dragged the coal miner down from 931p in February 2011 and the shares now look cheap on a 2013 p/e of 8.3. It’s a medium-term recovery play. |
304p |
|
Persimmon (MER) |
The Daily Telegraph |
Buy the UK housebuilder for income as the group plans to pay shareholders £6.20 per share over nine years to 2021. The first payment of 75p in June 2013 equates to a yield of 10.8%. |
697p |
|
Petra Diamonds (PDL) |
The Daily Telegraph |
A share-price plunge on reduced production guidance linked to the miner’s Finsch asset looks overdone. The shares should rebound when diamond prices recover. It’s on a 2013 p/e of 10.3. |
102p |
|
Portmeirion (PMP) |
Shares |
After a 6% profit increase in the first half, boosted by strong Diamond Jubilee sales, the firm could beat full-year forecasts, leading to a rerating. It’s on a prospective 2012 p/e of ten. |
473p |
|
Premier Oil (PMO) |
The Times |
The oil firm’s $1bn investment in the Falklands isn’t risk free, but adds 40% to estimated resources and reserves. It’s a speculative buy with the shares trading at half net asset value. |
377p |
|
Sports Direct (SPD) |
Shares |
As rival JJB Sports struggles, the retailer is upping market share and online sales are soaring (up 82% year-on-year). Buy ahead of positive news following 5 September trading updates. |
598p |
|
Vitec (VTC) |
The Daily Telegraph |
The firm behind the cameras used for the London Olympics should benefit from TV studios moving to HD and the growth of broadcasting in Asia. Buy on a 2012 p/e of 11.6 yielding 3.4%. |
301p |
|
WH Smith (SMWH) |
The Daily |
The newsagent has strong growth potential in its global travel business, while a planned £50m buy-back is attractive. An August 2013 p/e of 9.1 looks decent value on a yield of 4.3%. |
598p |
| SELL | |||
|
Abcam (ABC) |
Investors Chronicle |
Short Abcam as its high p/e of 27 is vulnerable when news turns less positive. The EU crisis and impasse over the US Federal budget could see a repeat of last year’s share-price fall. |
404p |
|
Biome Technologies (BIOM) |
Shares |
Sell the bioplastics specialist ahead of 3 September interims as turnover fell 38% in the second quarter (including sales down 58% in Germany). |
0.1p |
|
Severfield-Rowen (SFR) |
Investors Chronicle |
Falling construction demand, tightening margins and payment delays hit the structural steel specialist’s first half. The UK sector outlook is gloomy and there’s more potential downside. |
137p |
|
Spirax-Sarco (SPX) |
Investors Chronicle |
After a 6% fall in pre-tax profits in the first half, the group could face forecast cuts. A p/e of 16 is a premium to the sector and looks steep, given the poor outlook. Sell. |
1,948p |
|
United Utilities (UU) |
Shares |
Takeover talk of bids up to 900p per share for the water supply firm look wide of the mark as the group is trading at its highest level since 2008. Sell before the takeover premium vanishes. |
721p |