Sunday tips round-up: J Sainsbury, Just Retirement, Northumbrian Water
There is a case to be bullish on Sainsbury's. It reported good growth in non-food areas, where margins are likely to be stronger.
The increasing roll-out of its online delivery service and store opening programmes should also benefit profits. Meanwhile, the return of the sovereign wealth funds this spring can't be ruled out.
Unfortunately, the bear case is just as easy to make. The company itself admits households are feeling the pinch, while the competition for sales is driving down prices even as raw material costs soars.
On balance, the Telegraph says investors should be confident chief executive Justin King will steer their investment safely through the rest of what will prove a difficult year. Hold.
Having hit an all-time low of 110p this week, Just Retirement shares are trading well below November 2006's float price of 148p and are worth just a fraction of their all-time high of 305p. Yielding 1 per cent, they are on a modest ratio of around six times forecast earnings. However, with fears of a housing market crash showing no signs of fading, the stock is likely to continue on unsteady ground. Sell says the Sunday Telegraph.
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Northumbrian Water is worth buying for fundamental, speculative and defensive reasons. Brokers believe it will be taken over within a year or so and predict a buyer would pay well over the current share price of 339.5p. Buy says the Mail on Sunday.
RWS translates tens of thousands of documents every year into dozens of different languages. With the number of filings expected to keep rising by an annual 10 per cent a year, and corporate R&D spend likely to be the last to go in the event of a prolonged slowdown, RWS looks like a sound bet. On around 14 times 2008 earnings, the stock is not cheap, but offers steady performance and, unusually for an Aim stock, yields a healthy 3%. Buy says the Telegraph.
ITE Group offers investors a way to profit from the booming economies of the former Soviet Union. It gives multi-nationals an opportunity to sell into emerging markets through conferences held across the region. ITE is at a deserved premium to the sector because it operates in fast-growing economies, and has such a good view of future earnings. Buy says the Telegraph.
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