Welcome to our summary of the weekend's quality press tips, provided on Mondays by Weekend City Press Review.
PRESS TIPS:
The Times
■ Tempus: Deirdre Hipwell says Goldman Sachs is forecasting strong growth for Crest Nicholson (CRST), 346p, and a target price/earnings multiple of 10.1 times; this seems like a fair value (Last IC rating: Buy, 20 Sept).
■ WH Smith (SMWH) has exposure to airports and is expanding in locations away from high streets: we should celebrate it (Last IC rating: Buy, 10 Oct).
■ Avocet Mining (AVM), 6.5p, is a West Africa based mining minnow; there are enough lingering uncertainties over financing to keep it firmly on the watch list only for now (Last IC rating: Hold, 7 Mar).
The Independent
■ No Pain, No Gain: Derek Pain says Findel (FDL), 238.5p, reported a 5.2 per cent six-monthly sales increase and have risen from 142p when bought for Pain's portfolio two years ago (Last IC rating: Hold, 5 Jun).
■ Market Report: Buy WH Smith (SMWH), 905.5p (Last IC rating: Buy, 10 Oct); Hold Bwin.Party Digital Entertainment (BPTY), 122p (Last IC rating: Sell, 30 Aug); Sell Aggreko (AGK), £14.77 (Last IC rating: Hold, 2 Aug).
The Daily Mail
■ Investment Extra: Emma Dunkley looks at the top ten stocks traded on the London Stock Exchange by dividend yield: Hansard Global (HSD), 12.64 per cent (Last IC rating: Hold, 21 Sept); Man Group (EMG), 12.56 per cent (Last IC rating: Hold, 2 Aug); F&C Real Estate (FCRE), 9.66 per cent (No IC rating); City of London Investment (CTY), 9.02 per cent (Last IC comment, 2 Oct); Laura Ashley (ALY), 7.92 per cent (Last IC rating: Buy, 25 Sept); Schroder Real Estate (SREI), 7.53 per cent (Last IC rating: Hold, 16 Jul); Phoenix Group (PHNX), 7.32 per cent (Last IC rating: Buy, 22 Aug); Picton Property (PCTN), 7.28 per cent (Last IC rating: Hold, 26 Nov); MedicX Fund (MXF), 7.21 per cent (Last IC rating: Hold, 30 May); and UK Commercial Property (UKCM), 7.06 per cent (This is a top 100 fund).
The Sunday Times
■ Inside The City: Danny Fortson says Imperial Innovations (IVO) is due to announce a £2.4m annual loss this week; it is hard to value a portfolio company which relies on a new drug making it to clinical trials, a situation Imperial is in with its £25m investment in Circassia, which will only reach the approval stage in 2015. Until then, says Fortson, the company and its investors are running on faith (Last IC rating: Hold, 25 Mar).
■ Bellway (BWY) is expected to reveal a 33 per cent increase in pre-tax profits this week to £140m; Deutsche Bank thinks they can go 30 per cent higher, and, with only £6m in debt, and rising dividends as the economy recovers, the shares look cheap (Last IC rating: Hold, 16 Oct).
The Sunday Telegraph
■ Questor: says hold BAE Systems (BA.), 436.33p; the US shutdown has had an impact, major contracts are suffering delays but the shares trade at a discount to peers and a share buy-back over the next three years offers positive news (Last IC rating: Hold, 1 Aug).
The Mail on Sunday
■ Midas: Joanne Hart adds Imperial Tobacco (IMT) (Last IC rating: Buy, 22 Aug) and BP (BP.) (Last IC rating: Hold, 30 Jul) to the Midas Dogs of the Footsie highest-yielding FTSE 100 stocks portfolio, replacing BAE Systems (BA.) (Last IC rating: Hold, 1 Aug) and Vodafone (VOD) (Last IC rating: Hold 4 Sept) in the company of Admiral (ADM) (Last IC rating: Sell, 5 Sept), Resolution (RSL) (Last IC rating: Buy, 13 Aug), RSA (RSA) (Last IC rating: Hold, 1 Aug), National Grid (NG.) (Last IC rating: Buy, 16 May), SSE (SSE) (Last IC rating: Hold, 22 May), United Utilities (UU.) (Last IC rating: Hold, 26 Sept), AstraZeneca (AZN) (Last IC rating: Sell, 1 Aug) and Royal Dutch Shell (RDSA) (Last IC rating: Buy, 26 Sept): the portfolio has yielded 5.8% against 3.8% for the Footsie in the last quarter.
Business press headlines courtesy of Weekend City Press Review:
Higher Royal Mail price considered
The government explored whether the Royal Mail share price could have been higher after strong demand in the weeks before the float, but institutional investors indicated that they would have refused to have taken part at more than 330p a share, says the FT. A Whitehall official said that the government had asked Lazard to review the price range, and pointed out that hundreds of potential shareholders had dropped out at even 300p-330p. [Financial Times, p.1]
Canadians plot £8bn raid on RBS arm
The plan to break up Royal Bank of Scotland (RBS) into 'good' and 'bad' banks has led bidders, including Canada's TD Bank, into believing that a sale of Citizens could be brought forward from 2015. Analysts believe it will be possible to bundle £51m of debts into a state-owned 'bad' bank at no cost to taxpayers, and believe George Osborne will propose reform of the bank. US Bancorp and PNC are also thought to be interested in Citizens, estimated to be worth around £8bn, with US$95bn of deposits and 1,400 branches in the wealthy north-eastern US; it is too large to be absorbed by one of the dominant retail banks under US regulations, but could transform one of the second-tier institutions. [Sunday Times, p.3.1]
Small investors rush to sell Royal Mail shares
In the first two hours of trading in Royal Mail shares on Friday, nearly half of all trades were for 227 shares - the number given to small shareholders; at the closing price of 455p, small investors would have received profits of £285.75. The Sunday Times opines that small shareholders being the big sellers belies the notion that institutions would make a killing; the decision to only allow 10 per cent of the shares to be sold to hedge funds contributed to the 38 per cent share price leap. Some 600 City traders, charities, trust funds and pension investors failed to receive a single share as the portion set aside for City investors was 20 times oversubscribed; some are threatening to lodge a formal complaint with business minister Michael Fallon. [Sunday Times, p.3.1]
Serco's six-week ultimatum
Serco (SRP) has been given a six-week deadline by the Cabinet Office to improve performance and show 'change and corporate renewal' or lose three major government contracts, including a £285m contract for prisoner escort and management of three jails in Yorkshire; and an exclusion from bidding for the £800m probation service privatisation; Serco derives about 25 per cent of its annual £4.9bn revenue from government, and 45 per cent of sales from the wider public sector. The shares closed at 542p on Friday. [Sunday Times, p.3.1]
Court attack on airports review
Stop Stansted Expansion (SSE) group will begin proceedings in the High Court on Monday, asking for a judicial review of Sir Howard Davies' Airports Commission, arguing that the presence of Geoff Muirhead, former Manchester Airports Group boss, on the panel has compromised its work to date. Mr Muirhead was ousted from the Commission under pressure from SSE earlier this year; Manchester Airports Group bought Stansted airport in January. [Sunday Times, p.3.1]
Green light for giant nuclear subsidies
A deal is expected this week to underwrite construction of the UK's first new nuclear power station for twenty years, guaranteeing subsidies of 'tens of billions of pounds over decades' for EDF and China General Nuclear, to be funded by levies on household bills, already up 25 per cent since 2009. EDF has been working on a £14bn plan for two reactors at Hinkley Point since 2009; cost estimates have risen by 50 per cent in that time, and construction will take up to ten years. The government is expected to guarantee a price of over £90 a megawatt hour, double the current wholesale electricity price, for 35 years. [Sunday Times, p.3.2]
Cut EU red tape, Cameron told
A government-appointed six-man panel that includes Marks and Spencer chairman Marc Bolland, Kingfisher chief Ian Cheshire and ex-Diageo chief Paul Walsh is due to recommend in its report this week that 30 pieces of EU regulatory red tape should be cut or amended to help SMEs across Europe. The regulations include those referring to chemicals, employment, the time to register new products, and health and safety , which alone adds an estimated €2.7bn to business costs in Europe, says the report. [Sunday Telegraph, p.B1]
Boost for Chancellor as housing market set to drive economy
The EY Item Club described the Help to Buy scheme as 'well-timed and targeted', and said there was little risk of a housing bubble; recovering house prices would boost spending and GDP, EY predicting a 3.5 per cent rise this year, 6.6 per cent in 2014 and 6.7 per cen in 2015, while it expects transactions to rise by 11.9 per cen this year. EY expects GDP growth on the back of the housing recovery to be 1.1 per cent-1.4 per cent this year, and 2.2 per cent-2.4 per cent in 2014. But the Item Club warned that plans to reshape the economy towards exports and business investment had been all but abandoned. [Sunday Telegraph, p.B1]
Comet owner to recoup £117m from electrical retailer's collapse
Accounts from Hailey Acquisitions Limited (HAL), the vehicle used by OpCapita to buy Comet last year for £2, indicate that £67.9m is expected to be recouped from the administration process, while the collapsed retailer's balance sheet had £49m in cash at the time of its collapse. It was also revealed that two days before Comet entered administration in November 2012, HAL acquired a £30m from PNC Financial Services that was funding the retailers, making HAL the only secured creditor. Unsecured creditors, including HMRC, suppliers and landlords, says administrator Deloitte, will get less than 1p in the pound. [Sunday Telegraph, p.B1]
