Wednesday tips round-up: Admiral, Travis Perkins, Meggitt
Investors in Admiral Group were forced to adopt the brace position after the motor insurer's shares crashed 16pc despite unveiling good full-year results, with pre-tax profits rising 24pc to come in well ahead of expectations at £182.1m. Yesterday's tumble was a knee-jerk reaction though. Hold on and wait for calmer waters, suggests the Telegraph.
The Times reckons that given its still-steep premium to the insurance sector, Admiral can be no more than a hold.
Travis Perkins finished last year with profits up 18 per cent at £261m, better than expected, as it took around two points in market share from rivals. That should continue in the stagnant conditions anticipated for the current year. At just over 7 times expected earnings, the shares look cheap, but any early appreciation in value in current conditions is unlikely. Hold says the Independent.
If there was any nervousness surrounding Meggitt's $1.8 billion (£920 million) purchase of K&F Industries - the biggest acquisition in the aerospace engineer's 60-year history - it was soothed by yesterday's full-year results. With profits set to rise 16 per cent this year and next, the shares, at 294¾p, or 11 times 2008 forecast earnings, are modestly priced, the Times says buy.
The Telegraph agrees, calling the discount of more than 20pc to the rest of the sector undeserved. With a forecast yield of 3.2pc, the shares are worth tucking away, it says.
(Article continues below)Advertisement
Davenham operates in the foothills of the commercial lending market, so no surprise its share price was flattened by the credit crisis landslide. A bid of 325p a share from asset manager ACP Capital floundered in January. The shares are not expensive on 4.4 times expected earnings, but little excitement is likely on the trading front. The Independent says hold.
Online gambling software provider Playtech is underpinned by a £44 million cash pile and a likely move from AIM to the main market. However, they have rallied 22 per cent over the past six weeks to trade at 17 times 2008 earnings, which suggests there will be better times to buy. Pass, says the Times.
TV shopping firm Ideal Shopping Direct received a bid approach in January, most likely from one of the two larger players in the sector. Even if bid talks end inconclusively, the shares on 12 times expected earnings are well supported by underlying trade, sales up 6.4 per cent in a market growing between 5-7 per cent, and a host of initiatives, including a tie-up with BT Vision to show clips of Ideal shows to subscribers. Good value reckons 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.
