Wednesday tips round-up: Imperial Tobaco, Prudential, Eaga
Immediate attention at Imperial Tobacco will focus on integration of its £11bn acquisition, French-Spanish rival Altadis, best known for Gauloises and Fortuna. The deal strengthens Imperial's position in leading European markets.
The shares have slipped 13% from their best levels of last year, and at the current price sell on 15.7 times forecast earnings for 2008. In what promises to be an uncertain year for consumers everywhere, they are probably fairly priced says the Independent. Hold.
Prudential, at 14 times 2008 earnings under international financial reporting standards, may be the most expensive UK insurer, but it is also the most profitable. However, that premium also means that an oft-mooted takeover by an American or European rival is unlikely, given the inevitable dilutive effects. Hold says the Times.
The current year will be more testing for Prudential as household budgets come under growing pressure and people attempt to pay off debts rather than invest in new savings products. However, the Prudential hopes its focus on providing retirement products, which tend to be less sensitive to economic swings will offset weaknesses elsewhere. Hold says the Independent.
Imperial Leather owner PZ Cussons has been a solid performer over the medium term, but on a price earnings ratio of around 17.5 times, investors must pay for it. Nevertheless, they remain cheaper than larger rivals like Reckitt Benkiser and worth a closer look. Buy says the Telegraph.
(Article continues below)Advertisement
Dividend payout and bid hopes aside, mortgage lender Alliance & Leicester has little to recommend it: the prospect of increased provisions against its mortgage book, the risk of further writedowns against SIVs and shares that, at 700p, or nine times 2008 earnings, are at a premium to their peers. Avoid says the Times.
Yesterday's maiden interims showed home energy efficiency specialist Eaga to be very much on track. Sales were up an above-forecast 44%, underpinned by the Government's Warm Front initiative, while underlying operating profits were ahead 21%. A multiple of 11 times next year's earnings and yesterday's purchases by directors add to the case. Buy says the Times.
Problems with power in South Africa seems to be fading and most analysts have buy recommendations on Anglo American that are not dependant on it taking part in the wave of consolidation sweeping the sector. With commodity price rises seemingly inexorable, it is hard to disagree that Anglo could still flourish on its own. Buy says the Telegraph.
Poor weather decimated Straight's sales of butts and other products such as home composters last year. Hopes of a recovery this year are not resting with the weather alone. The company is investing in a new range of recycling products. With 2007 profits expected to be down from £2.3m to £1.5m on a 15% fall in sales, avoid for now says the Independent.
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.
