Thursday tips round-up: Xstrata, Bellway, SSE
With its sole suitor walking away, there was only one way for shares in mining giant Xstrata to head yesterday - south.
It is likely that there will be some short-term weakness now that bid talks are off, but at these levels, the company may buy back shares which will lend support to the stock. With price targets as high as £45, and the shares trading at around nine times estimates, this could be a good opportunity to top up holdings. Buy, says the Telegraph.
Bellway is known for issuing trading statements that are both candid and concise, and the comments that accompanied yesterday's first-half figures from Britain's fourth-biggest housebuilder continued that custom: "tough" is the word it uses to describe the current market. Even at 789p, against a net asset value of 934p, and a near-6 per cent dividend yield, the shares are best avoided, writes the Times.
The Independent says its a cautious hold.
Energy companies are a good defensive play in these markets and long-term consolidation should make Scottish & Southern Energy attractive. However, debt remains an issue. Hold, writes the Telegraph.
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While 2008, and possibly beyond, will be tough for ScS, nobody thinks the group will go out of business. But the same cannot be said for the thousands of local retailers that make up the most of the rest of the retail furniture industry. It just might be that ScS emerges from the credit crisis with a bigger market share than its present 5 per cent and in a position to make lots of money. Hold for now, says the Independent.
Booker's defensiveness and strong double-digit earnings growth on a forward multiple of 10 makes the shares a solid hold at 24p, according to the Times.
Next year's retendering of its biggest contract, a £50 million schools inspection deal with Ofsted, could see Tribal take on more work if it succeeds. At 135p, or ten times 2008 earnings, Tribal is worth buying on weakness, says the Times.
The credit crunch will undoubtedly dent FW Thorpe, but the group remains in good health and should not frighten buyers. Hold, says the Independent.
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