Investment Ideas 

Press tips & headlines: AVEVA, the Land Registry, recruiters

'Hold' shares of engineering software group AVEVA (AVV) for the long term, recommended the Tempus column in The Times on Tuesday. While AVEVA is seen by analysts as a "world-class British company with a leading position in its core business", the market has fallen out of love with the stock, according to paper.

The Times explained that earnings are "lumpy and unpredictable", while problems in its smaller enterprise solutions division have dampened sentiment. However, recent deals and contract renewals should lead to a stronger second half from the company after a relatively soft first quarter. Nevertheless, a strengthening sterling is one thing to watch out for given that the company generates 95 per cent of revenues from exports.

Tempus said that the stock now trades on a "more subdued rating" at 22 times earnings, having previously sold on a multiple of nearly 30 times. "This begins to look cheap, given the strength of Aveva’s position with the big engineers, but it may take the market a while to appreciate this," the paper said.

The most recent round of trading updates from the recruitment sector "contain warning signs for investors", according to The Telegraph's Questor column, which said that the UK jobs market is slowing. Recruitment firms such as Hays (HAS), Michael Page (MPI), SThree (STHR) and Robert Walters (RWA) are seen as bellwethers for the wider economy but recent newsflow suggests a "fragile recovery", the paper said.

Questor highlighted that stocks in the sector have struggled so far this year, with firms with a large exposure to the UK hit by a slowdown in growth in the second quarter. "The sector is interesting for investors as it shows that the market priced in a stronger recovery than was actually delivered. For the long-term investor it is well worth keeping an eye on recruitment shares as a guide to the rest of the year."


William Hague is to stand down as foreign secretary with immediate effect and will take on the lesser role of leader of the House of Commons as David Cameron embarked on the most far reaching reshuffle of the parliament that was dubbed a new "night of the long knives". A far wider than expected cull of male ministers saw the former chancellor Kenneth Clarke leave the government alongside Damian Green, the policing minister, Dominic Grieve, the attorney general, and David Willetts, the universities and science minister. - The Guardian

Shoppers put the brakes on spending last month amid concerns over the potential for higher interest rates, a retail industry report suggests. The latest retail sales index from the British Retail Consortium and KPMG showed that like-for-like sales fell 0.8 per cent compared with a year ago, with total sales – including shops open for less than a year – up 0.6 per cent.- The Guardian

Scottish independence could see the value of sterling drop by up to 10 per cent, leave the rest of the UK more exposed to financial risks and delay a decision on increasing interest rates beyond the general election. The findings emerge from a study by economists at Morgan Stanley in London based on a “yes” vote in the September referendum. - The Telegraph

Controversial payday lender Wonga will become “smaller and less profitable” after new chairman Andy Haste vowed to clean up the company’s act and make sure it only offers loans to customers who can afford them. - The Scotsman

The government has said it needs more time to decide whether to sell the 150-year-old Land Registry because of infighting in the coalition after the privatisation of Royal Mail (RMG). Ministers had hoped that a sale of the department, which was created in the 1860s to register the ownership of land and property in England and Wales, would boost the public coffers by at least £1.2 billion. - The Times

The Treasury has bowed to demands from the oil industry for a formal review of the North Sea tax regime which companies say is hastening the demise of production.The government yesterday launched a 12-week consultation and any changes to the regime could be unveiled in the Autumn Statement. - The Times

The International Monetary Fund has issued a blistering attack on Europe’s authorities for allowing the eurozone to remain stuck in a low-growth trap, warning that they may have to print money with “full conviction” to head off deflation. “Inflation has been too low for too long. A persistent failure to meet the inflation target could undermine central bank credibility,” said the IMF with remarkable bluntness in its annual health report on the currency bloc. - The Telegraph

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