Tuesday tips round-up: Aberdeen Asset, Capita, Morgan Crucible
Fund manager Aberdeen Asset sits at 12 times current-year earnings, cheaper than Henderson or F&C, and yields 4%. But the shares cannot help but suffer should financial markets endure more turmoil, which gives reason to avoid them for now says the Times.
While the credit crunch persists, fund management share prices remain at the mercy of market volatility. Until this changes, it's hard to tell where the price will go. Hold Aberdeen says the Telegraph.
It's called telematics, but most people would know it as vehicle tracking. Either way, it's been a good business for minnow Cybit. Strong interim profits yesterday come on the back of some high-profile contracts, such as tracking vehicles for Sainsbury's online delivery service. The shares currently trade on a ratio of just 10 times next year's earnings, falling to eight times in 2009. At those levels, they are certainly worth a look. Buy says the Telegraph.
Morgan Crucible is perceived as among the first to feel the effects of any slowdown in its industrial base, so yesterday's news was taken as evidence that the peak has passed. It was also seen to threaten Morgan's target of achieving underlying operating margins of 15% over the medium term. The 6% reduction in 2008 earnings forecasts suggests the slide in the shares to 200¼p, or ten times next year's numbers, is overdone. But a higher rating seems out of reach until Morgan can demonstrate its targets hold. Avoid says the Times.
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The FT adds that a fall of 10% might have been justified but the shares do not warrant a 34% discount to UK engineering peers. Investors want assurances but the low forward visibility of Morgan Crucible's markets prevents it making full 2008 forecasts. Earnings expectations for 2008 have been trimmed. But the company has a spread of geographical markets and products, and appetite and resources for acquisitions.
Solar electricity generation specialist PV Crystalox said that pretax profits would be "materially ahead" of expectations, such that earnings forecasts for the current year are now 20% higher than they were six months ago. A new factory in Germany will also give the company its own source of silicon from 2009. At 13 times 2008 forecasts, a discount to its peers, the shares are worth buying on weakness says the Times.
Outsource giant Capita shares trade on 27 times this year's forecast earnings, falling to 24 times 2008's, which looks like a full valuation. Existing investors should be in no hurry to sell just yet - the company should outperform the market next year - but others may wish to seek value elsewhere. Hold says the Telegraph.
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