Wednesday tips round-up: Hargreaves Lansdown, 888, Balfour Beatty
First-half trading to December at fund manager Hargreaves Lansdown turned out to be remarkably resilient considering the turmoil in financial markets. Even so, in uncertain markets the shares, selling on 16 times forecast earnings for 2008, should not be chased. Leave for now says the Independent.
On more than 18 times current-year earnings, and yielding 3%, Hargreaves shares are fully up with events at a time when sentiment on financial markets remains poor. For first-time investors, there will be better times to buy says the Times.
Online gamer 888 has set itself the goal of achieving £205m of revenue and £53.8m of profit by 2010, which no longer looks like a pipe dream. Much of the growth to reach this target will probably come from the Asian Pacific region. Good value. After the US clampdown, 888 attracted bid attention from Ladbrokes but no deal emerged. Consolidation among the gaming operators is still highly likely, attractive says the Independent.
An outlook for 888 including a new sports betting site, plus more strategic partnerships, new casino games and technological upgrades demonstrate a company moving beyond post-US recovery mode. Bingo is showing strong growth, and the regulatory outlook across Europe will evolve in the sector's favour. A forward p/e of about 15 times may be at a premium to peers, but few analysts would bet against it increasing its value, says the FT.
Balfour Beatty's acquisiton of GMH brings it closer to its objective of building a business in America that will rival its domestic operations. Still left with £250 million of cash and armed with substantial US tax losses from its BICC days, the shares, at 448p, or 11 times 2008 earnings, are worth holding says the Times.
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TT Electronics described yesterday's deal, through its Indian joint venture, to provide speed sensors for the newly unveiled £1,300 Tata Nano as "relatively modest in value terms," but its shares still rose by 11%. Buy at 91p says the Times.
Worries about the strength of the housing market have wiped nearly 50% off the value of Grainger over the last year. Grainger is the country's biggest residential landlord. It has bought huge swathes of old terraced houses built for railway workers and miners, collects the rent, and then sells them as the owners depart. They are unlikely to make up much ground until uncertainties over the housing market ease. Hold says the Independent.
Grainger is relatively lowly geared at 53pc loan to value, has diversified into the German residential market with a €500m (£372m) purchase of a 6,800 unit portfolio and continues to push its development pipeline. Hold says the Telegraph.
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