Stick with shares of Marks & Spencer (MKS) and consider what the company could achieve if all its businesses performed well, Questor said in the Sunday Telegraph. M&S’s food business has continued to do well while supermarket rivals face price pressure. M&S reported clothing separately from its other non-food products at last week’s trading update, showing clothes sales up 0.6 per cent. That is not great but Chief Executive Marc Bolland said womenswear was encouraging. The question for M&S is whether increased sales are at the expense of lower prices. Until that matter is resolved the shares are a hold.
If Debenhams (DEB) can show that its deterioration has stopped, investor faith may be restored, Matthew Goodman argued in the Sunday Times. The department store shocked the City on new year’s eve by warning of dire Christmas sales. Chief Executive Michael Sharp has been working on a recovery plan and sales will have been helped by recent warm weather, Goodman said in the Inside the City column. Mike Ashley’s Sports Direct is pushing for Debenhams to stock its clothing lines. Cantor Fitzgerald predicts half-year profits of £86m, just above analysts’ consensus, when Debenhams reports on April 15th.
RSA Insurance (RSA) remains a high-risk buy, the Sunday Telegraph’s Questor column recommended. The company has completed a rights issue to prop up its finances after discovering losses at its Irish arm. Beyond the Irish business, RSA has attractive operations in Scandinavia, Canada and emerging markets. Its annual results showed profit down because of accounting issues but cash flow was strong.
Shares of estate agent Martin & Co (MCO) offer value for the long run, the Mail on Sunday’s Midas column argued. The company added sales to its lettings business in 2012 in time to benefit from the property market revival. Martin floated on the Aim market last December and is well placed to gain from the more upbeat mood. Martin agents are franchisees so they have a big incentive to succeed while drawing on the group for support. Chief Executive Ian Wilson has pledged to pay half of post-tax profits as dividends.
Reckitt Benckiser (RB.) is reportedly the favourite to buy Merck’s consumer health business, including Coppertone sun cream. Its fourth-quarter figures on April 16th could be a chance to update investors on the deal. However, Matthew Goodman, in the Sunday Times’s Inside the City column, said reticent Reckitt would probably steer clear of discussing the transaction.
There are more gains in store for long-term investors in Macfarlane Group (MACF) after its shares rose 62 per cent following Midas's recommendation in December 2012, the Mail on Sunday column said. The packaging company has moved into supplying online merchants including upmarket companies that are expanding on the internet. Analysts forecast sales up 3 per cent this year with profits up 5 per cent and the shares yielding almost 4 per cent. Macfarlane should grow faster over the next few years as the economy picks up. Shareholders should hold on and new investors could find value.
BUSINESS PRESS HEADLINES:
Asking prices for homes in the UK have risen by 7.3 per cent over the past 12 months, according to Rightmove and can be expected to rise by an additional 7.4 per cent this year, a new report from the E&Y ITEM Club says. However, the pace of increases is expected to taper to 7.2 per cent next year before retreating to a 4.2 per cent clip in 2016. An increase in the supply of new homes, greater caution from mortgage lenders and tougher regulations from the Bank of England will all help to avoid an unsustainable boom, the think tank added, according to The Times.
Iran has unveiled plans to double its oil production by the end of the decade and, ignoring sanctions, pump billions of dollars of its currency reserves into developing its share of the world’s largest natural gas reservoir in the Persian Gulf – the South Pars field. The total cost of these new projects is expected to reach up to £8.3bn. However, it is thought unlikely that Iran will be able meet its targets without help from international oil companies, The Daily Telegraph reports.
Troubled pub operator Punch Taverns (PUB), Britain’s second biggest pubs group, has brought in an independent corporate restructuring expert to aid in the long-running negotiations over its £2.3bn pile of debt. It is hoped that a deal between the company and its creditors can be reached by the start of May. A deal, which may include a debt for equity swap, between Punch and its junior creditors could soon be agreed. In parallel, negotiations with senior bondholders are continuing. However, to avoid a default fresh restructuring proposals must be reached by June 30th, The Daily Telegraph says.
Commodities giant GlencoreXstrata (GLEN) has announced its intention to sell its Las Bambas copper mine to a Chinese consortium for more than $6.25bn. The sale was imposed by China’s commerce ministry as a condition for approving Xstrata’s takeover by Glencore. The transaction also marks China’s largest purchase overseas in six years, according to The Times.
Scotland’s economic recovery is now on a solid footing, the latest Bank of Scotland purchasing managers index showed. The survey, which canvasses hundreds of businesses, showed that improved conditions had led companies to increase staffing levels, even if the pace moderated from February's’ peak. Better conditions were seen in both manufacturing and services, but exports continued to be a weak spot, The Scotsman reports.
The Co-operative Bank is preparing to raise £400m even without any input from the Co-op Group given that there is “more than enough interest” from other investors, sources close to the deal told The Daily Mail. The Co-op Group, which holds a 30 per cent stake in the bank, is set to reveal massive losses when it publishes it full-year figures, on Thursday. In no mean part, that will be due to the £1.3bn in red ink racked up at the Co-op Bank. The company had previously stated that it would honour its obligations to contribute £263m to last year’s capital raising effort at the lender. On top of that, nonetheless, it may now be called upon to put up a further £120m.
