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Press headlines & tips: Rolls-Royce, Royal Mail, AG Barr

Our summary of all the shares tipped by the quality papers on Saturday and Sunday
September 23, 2013

Welcome to our summary of the weekend's quality press tips, provided on Mondays by Weekend City Press Review.

PRESS TIPS:

The Times

Tempus: Martin Waller says Rolls-Royce (RR.), 6p down at £11.06, sell on 16 times earnings, which is high, but still one to hold (Last IC rating: Buy, 26 Jul).

Xchanging (XCH), 127p, is an attractive long-term buy with good growth potential (Last IC rating: Hold, 31 Jul).

Direct Line (DLG), 210p, is waiting for RBS to offload its remaining 28.5 per cent share, which it must do by the end of 2014; the nearly 6 per cent dividend should buoy the shares up until RBS is off the register (Last IC rating: Sell, 2 Aug).

The Independent

No Pain, No Gain: Derek Pain reviews the performance of his portfolio over the last quarter, having offloaded G4S (GFS) (Last IC rating: Hold, 28 Aug) and Northern Petroleum (NOP) (Last IC rating: Hold, 8 Jun) and bought Alkane (ALK) (Last IC rating: Buy, 11 Sept) and Lloyds Banking Group (LLOY) (Last IC rating: Hold, 17 Sept): it is up £8,000 since June at £116,000.

Market Report: Buy Restaurant Group (RTN) (Last IC rating: Sell, 2 Sept), 540.5p; Sell Royal Bank of Scotland (RBS) (Last IC rating: Hold, 2 Aug), 364.4p; Hold Vedanta Resources (VED) (Last IC rating: Hold, 16 May), £11.16.

The Daily Mail

Investment Extra: Ian Lyall looks at the Royal Mail flotation, balancing the risks of industrial unrest and strong competition against growth in the parcels division driven by internet shopping, and concludes that a likely dividend yield of 7-8 per cent is the clincher (Last IC rating: Await documents, 10 Jul).

The Sunday Times

Inside The City: Matthew Goodman says AG Barr (BAG) is suggested to be a possible predator again for Britvic, in a partnership with Suntory; the Scottish soft drinks maker is on a decent run, with Shore Capital forecasting a 4.9 per cent rise in sales and 12.4 per cent rise in pre-tax profits to £16.6m: the shares have risen 15 per cent over the past year (Last IC rating: Hold, 22 Mar).

Clinigen (CLIN), 370p, has risen over the year since it floated from 164p - up over 100 per cent - but a restriction on the board selling shares ends next month (Last IC rating: Buy, 1 Aug).

The Sunday Telegraph

Questor: John Ficenec says sell Asos (ASC), £57.01; sales are growing rapidly, but the shares are trading on a multiple of 84 times forecast earnings: revenue has to grow by 30 per cent and earnings per share by 50 per cent to reach that target (Last IC rating: Hold, 20 Sept).

The Mail on Sunday

Midas: Joanne Hart says buy Unite (UTG), 368.25p; the UK's largest provider of student accommodation has a strong presence and a long-term expansion plan that will benefit shareholders (Last IC rating: Buy, 30 Aug).

Update: WYG (WYG), tipped December 2012 at 62.5p and now 104.25p; holders may want to sell a quarter of their stock and bank some profits, new investors should buy a few (Last IC rating: Buy, 19 Sept).

 

Business press headlines courtesy of Weekend City Press Review:

Cash purchases fuel housing boom

35 per cent of UK homes are being bought solely with cash, a record high, the FT revealed in a study by Savills and Hometrack, in the week that UK house prices passed their pre-crisis peak, with the London average up nearly 10 per cent in the past year. The figure, compared with 10 per cent in the year to June 2004, is being inflated by £9bn in cash spent in London by overseas buyers from the Far East, emphasizing the two-speed London/Regions housing recovery, and throwing doubts on fears of a debt-fuelled bubble. [Financial Times, p.1]

Brussels braces for bank chaos

The European Central Bank is to begin a detailed review of lenders' finances ahead of banking union, prompting the European Stability Mechanism rescue fund of €500bn to hire investment banks to advise on potential rescues, as senior bankers expect the review to unearth problems with banks not admitting all bad debts in Italy, Portugal, Spain, France and possibly Germany. The plan for banking union in the 17 eurozone states, which will give the ECB control of bank regulation, has passed the first stage in the European parliament. [Sunday Times, p.3.1]

Osborne's Swiss tax raid falls short by £2bn

Chancellor George Osborne's raid on secret Swiss bank accounts held by UK residents that began in January has been revealed in figures released by HM Revenue & Customs to have raised less than £1bn, when the expectation was for £3.2bn. Swiss authorities warned in July that non-doms would be able to get round the deal to hit UK residents with Swiss assets with a one-off 21 per cent-41 per cent levy, and the ONS raised 'significant doubt' over how much the plan would secure. [Sunday Times, p.3.1]

City sees no bubble as house prices soar

House prices have been rising at their fastest pace in three years, according to figures from Moody's Analytics; prices jumped 4.5 per cent in the last year, and a combination of continuing bond-buying by the Federal Reserve and cash buyers in London are fuelling the boom. Of the seven conditions Moody's say are necessary for a bubble, only three exist now - low mortgage rates, high household debt and the growth of payday lenders - compared with six before 2008. [Sunday Times, p.3.2]

Hammond delays defence sell-off

Defence secretary Philip Hammond has asked the Cabinet Office to review the business case for outsourcing Defence Equipment & Support (DE&S), which has an annual budget of £15bn. The pat-privatisation would make the UK unique in outsourcing its weapons procurement. Two bids remain in place, from rival US contractors Bechtel and CH2M Hill, but sources close tom the process believe the plan is unlikely to happen, reports the Sunday Times. [Sunday Times, p.3.2]

Royal Mail backs down on pensions

The Royal Mail are to offer staff a new pension deal to stop industrial action creating problems for its £3bn privatisation; the company scrapped a proposal to cap pensionable pay rises at the rate of inflation on Friday, a proposal rejected by the Communication Workers Union. The CWU are to send ballot papers to 115,000 members on Friday, announcing the result on 16 October; the earliest strike date would be 23 October, coinciding with the stock market listing. [Sunday Times, p.3.3]

Economic boost as wages rise

New research from the Federation of Small Businesses shows that half of all smaller companies are planning to increase salaries in the next year: the first evidence of rising wages for five years. The news comes at the same time as a warning from the CBI that an increase in the minimum wage could damage companies, and an attack on zero-hour' contracts would increase business costs for struggling companies. [Sunday Telegraph, p.B1]

Private equity firm JC Flowers looks at bid for new TSB business

Lloyds Banking Group (LLOY) has received several approaches to buy TSB, notably from US-based JC Flowers. While the plan is for a stock market flotation in mid-2014, Lloyds chief executive Antonio Horta-Osorio is not averse to a trade sale that may offer greater certainty; the TSB business was due to have been sold to the Co-operative Bank until the black hole on the Co-op's balance sheet was discovered in April. It is thought that AnaCap, working with Blackstone on a bid for the Royal Bank of Scotland 'Rainbow' business, may have expressed an interest. [Sunday Telegraph, p.B1]

Chancellor faces attack over house price boom

Economists, including Rob Wood at Berenberg Bank, have suggested that the Help to Buy scheme is unnecessary and may 'create the conditions for the next bust'. Albert Edwards at SocGen described the scheme as 'moronic', adding that the market is already in a bubble and a bust is inevitable. Wood suggests that the problem is not where the prices are today, but in three years time. [Sunday Telegraph, p.B3]

BP to make millions from lifting of Iranian gas ban

A North Sea oilfield jointly owned by BP (BP.) and National Iranian Oil is set to be reopened following government intervention allowing BP to become exempt form sanctions legislation; the Rhum field, which once supplied 5 per cent of the UK's gas output, has been idle for three years. [Mail on Sunday, p.79]