Friday tips round-up: CRH, Inmarsat, Autonomy
If there is reason to believe that CRH can weather tougher times better than most it lies in the group's prowess as an acquisition machine - through which it enhances earnings by buying at lower multiples than its own, securing economies of scale and stripping out central costs.
However, concern that US non-residential spending cannot sustain its strength for ever means that buyers of the shares are likely to be hard to find, making the stock, at €24.85, no more than a hold according to the Times.
CRH may fall further but given it is trading on a 2008 price earnings ratio of 10.8 times, versus a long-term average of 13.7 times, it looks attractive. Hold agrees the Telegraph.
Inmarsat provides telecoms to parts other companies cannot reach. Journalists, aid workers and the military all rely on its satellites to communicate from areas that, for whatever reason, are lacking the necessary infrastructure. A price earnings ratio is not the best measure to value Inmarsat as the business model makes earnings figures highly erratic. Still, a string of analysts forecast the shares will rise to between 510p and 540p and the growth prospects remain solid. Buy says the Telegraph.
Telecoms equipment supplier BATM is trading on 17.5 times forecast earnings for 2008 but this is likely to be closer to 15 times once analysts upgrade their forecasts following yesterday's bullish update. There is still value to be had. Buy says the Telegraph.
(Article continues below)Advertisement
John Lewis of Hungerford has recovered from a "disappointing" period a year earlier, when turnover dropped 8.3%. It prides itself on the quality of its kitchens and strong customer loyalty for its middle-to-upmarket brands. The shares, which have more than doubled in the last year, trade on a historical price to earnings ratio of 28.5, giving the impression of little threat to earnings growth says the FT.
Autonomy, the biggest player in legal and compliance software, is an obvious beneficiary of litigratin arising from the credit crunch. On 32 times current-year earnings, the shares are not obviously cheap. However, with earnings forecast to grow at least 40% this year and 20% next, and more bank deals possible, it is worth holding on reckons the Times.
Majestic Wine's strengths remain. It has an excellent long-term track record, cash on its balance sheet - it has been buying back shares - and considerable scope to expand beyond its current 141 stores. But given weaker consumer spending, strongly rising wine prices after poor harvests in France and Australasia, and the risk of above-inflation increases in wine duty in this year's Budget, the shares are best avoided says the Times.
Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.
