Thursday, March 31, 2011

money magazine stock picks for 2011

money magazine stock picks for 2011 : Questor has been a fan of BG Group for some time – even when gas was 'unfashionable'. The shares were range-bound for some time but have finally got moving. Further gains are expected. BG is no only a gas company – it is in the oil business too. The company recently shipped the first oil from its massive offshore projects in Brazil, an important milestone for the company. The company is expected to invest about $30bn (£18.7) in Brazil over the next decade. The shares are trading on a December 2011 earnings multiple of 18 and yielding 1%. Despite the high rating, the shares are a buy.

Yesterday's trading update from support services group May Gurney was excellent. The company said it expected full-year numbers to be at the top of forecasts and that the group continued to win business against a difficult backdrop. The company is involved in highway maintenance and recycling as well as rail, water and utility services. The company has a net cash position of £9m and its forward order book stands at £1.4bn. The shares are up 17% since October 2009, compared to the FTSE 100 up 19% and the rating on the shares remains buy.

Shares Magazine

Technology is transforming the way most of us live, play and work, thanks to internet on-the-go, pervasive social networks, and 'cloud-based' business applications. CSF is fast becoming the lead operator right across south-east Asia. After a pullback from last year's 85p record high, the shares trade on a cash-adjusted March 2012 price/earnings ratio of about seven and a rating of just under ten times stated earnings. Buy.

The uprising across the Middle East in the past few months is a worry for companies that have workers in high-risk locations. That should have created more business for Red24 which specialises in helping individuals and corporates to manage security risks. We expect the security advice group to have been busy amid the Middle Eastern troubles, so buy ahead of results in June which could beat forecasts. Buy.

The Times

At the start of the year, with shares in Domino's Pizza trading on approaching 30 times this year's earnings, I did rather suggest that however well positioned they might be, no company tied to trends in retail or leisure could expect to enjoy this kind of rating forever. The shares have fallen almost a quarter since, even before yesterday's 4% fall to 428p. Yesterday's trading statement showed them up 4.2% in the first quarter. Although the story is still the same long term, short-term progress looks limited. Hold.

Charles Taylor Consulting, the specialist insurance adviser, says that the cost of finding a replacement for John Rowe, the chief executive, will be excluded from adjusted profits and earnings per share this year. The company is taking a sensible view of the dividend, slashing the final payment to 4.46p to make a total dividend down from 14.55p to 10. The rating of about six times this year's earnings reflects the market concern. Avoid.

The Independent

Investors in Domino's Pizza appear to have suffered from a bout of indigestion since its shares hit an all-time high of 586p in the first week of January. The only real problem we have with the ingredients at Domino's is its spicy earnings valuation of 22 times forward earnings. For this reason, we suggest that investors let the price cool down a little before buying further shares. Hold.

Charles Taylor Consulting, it is worth pointing out, has nothing to do with the former Liberian president on trial at the Hague, and everything to do with the business of insurance. Mutuals are more profitable, there is a more favourable regime in the UK, and business is likely to pick up after the tragic earthquake in Japan. Moreover, with an undemanding forward earnings multiple of less than seven times, we think this stock may be worth a punt. Buy.

WEDNESDAY

The Daily Telegraph

With silver prices soaring, it's hardly surprising that Latin America-focused miner Hochschild posted record revenues and profits last year. However, what is most important is the company's expansion and exploration programme – and Hochschild has been delivering on this front. The shares are trading on a December 2011 earnings multiple of 16.6 but this rises to 18.2 next year. Questor has had a hold rating on the shares for some time. The increase in silver price has been rapid and any correction could be sharp. Hold.

Shares in travel operator Thomas Cook are now below the initial recommendation price, hit by disruption in North Africa and rising fuel costs. Yesterday's trading update was mixed. Trading for winter bookings slowed down in the last two months, hit by geopolitical tension. The shares were tipped on August 15 last year at 176.9p and they are down 7%, compared with a FTSE 100 up 12%. They are trading at a 30% discount to rival TUI Travel, which Questor thinks looks too cheap and the rating remains a buy for both the yield and capital appreciation.

The Independent

Wolseley was the toast of investors yesterday after it reinstated dividend payments for the first time since 2008. It operates the Plum and Build Centre brands in the UK, said yesterday construction sectors had now 'broadly stabilised' in most of the 25 countries in which it operates. Investors should note its shares have powered ahead since sinking to 1223p in August and have outperformed the FTSE 100 by more than 25% during the past year. The lofty valuation makes the company only a hold.

After a rocky couple of years there are signs of life at Man Group, the world's biggest publicly traded hedge fund. It said yesterday that it expects new client money to outstrip redemptions in the final quarter of the year to March after two years of net outflows. Predicted annual pre-tax profit of $560m (£350m) is ahead of consensus and Man will pay a dividend of 22 cents. We are moving Man up from September's sell recommendation to hold.

The Times

Not for the first time, figures from Kazakhmys, the FTSE 100 miner, provide more questions than answers – 'essentially a formality,' was the verdict of one analyst. The rising copper price meant that headline earnings before exceptionals were strongly ahead. The average price the company realised for the metal rose by 50% in 2010 on 2009, while production prices rose by 24%. However, private investors have no particular reason to chase the shares. Avoid.

Yesterday Babcock was named sole bidder for a £300m procurement programme for the Navy. The shares, which traded on about 13 ties' earnings a couple of years ago, now sell on about 11.8 times' this year's earnings and ten times' those for 2011-12. Most analysts have them as a buy; at that level, attractive in the long-term.

TUESDAY

The Daily Telegraph

Recent full-year numbers from Cineworld were bang in line with expectations, helped by premium pricing on 3D films. Of course the group's performance depends on the output from major studios, something which is beyond the company's control. However, cinema-going in the UK remains extremely popular and Cineworld was the number one operator in the UK in 2010. In the year to December, revenues rose 4.8% to £342.8m and pre-tax profits moved up 0.3% to £30.4m. The prospective yield rises from 5.2% this year to 5.5% in 2012 and almost 6% in 2013, make the share attractive for income seekers. Buy.

Questor recommended buying shares in easyJet in January after they crashed by almost one fifth. The share price fall was prompted by the revelation that first-half losses were expected to nearly double. At the time, Questor said that there was a risk involved in the investment because of rising oil prices – but the long-term prospects were sound. The shares are trading in a September 2011 earnings multiple of 9.2, falling to 7.7 next year. They remain a risky buy.

The Times

There will be some relief among investors in Aberdeen Asset Management that the company has stemmed the outflow of assets under management in the first couple of months of this year. But uncertainties continue, especially over the effect of the Japanese catastrophes. Aberdeen shares were strong performers in the second half of last year, even if they have slackened off since. They sell on almost 13 times' this year's earnings. Given the uncertainties, further advances could be limited in the short term. Hold.

LMS Capital is an odd company, although Glen Payne, the newish chief executive, says it is becoming less odd. This is the old London Merchant Securities, shorn of its property arm; the Rayne family, who founded the original business, still hold 36%. It is an investment vehicle that is gradually churning its portfolio of quoted and unquoted companies to concentrate on three main areas – energy, consumer and business services. A more focused approach to investment should pay rewards. A speculative buy.

The Independent

Visits to the Daily Mail's website have soared in the past year and the site is now taking on the US market – but there are a few issues to sort our somewhat closer to home. Daily Mail & General Trust's (DMGT) pre-close update, released yesterday ahead of its half-year results, reported revenues up 5%, largely thanks to its business-to-business arm. Numis has the shares on a price of 10 times full-year earnings, which looks pretty cheap. Buy.

AG Barr, the maker of the Irn-Bru soft drink, delivered a fizzing set of full-year results yesterday. The Cumbernauld, Scotland-based company posted pre-tax profits up by 13.3% to £31.6m, on sales up 10.4% to £222.4m for the year to 29 January. However, despites its momentum, we are not convinced of the investment case. The shares now trade on a forward earnings multiple of more than 20, which makes us reluctant to back them in what is likely to be tougher soft drinks market this year. Hold.

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