| Buy |
| Company |
Publication |
Reason |
Price tipped |
Adv. Comp. Software (ASW)
Aim |
Shares |
The business management software firm grew revenues 10% to £98m and has 57% recurring revenue. The shares are cheaper than rivals on a forward price/earnings (p/e) ratio of 12.4. |
58p/38p*
54p |
Ashtead (AHT)
Commercial services |
The Sunday Telegraph |
This construction equipment-hire firm is benefiting from a trend towards renting through the downturn. Full-year profits are 6% ahead of expectations. Buy. |
276p/98p
252p |
Central Asia Metals (CAML)
Mining |
Investors Chronicle |
Getting output from this copper miner’s Kazakhstan plant should be simple and cheap, with 5,000 tonnes expected this year and 10,000 next. A 2013 p/e of less than three looks too cheap. |
107p/54p
80p |
CLS Holdings (CLI)
Real estate |
Investors Chronicle |
The property firm is benefiting from an unusually wide gap between rental yields (7%) and the cost of debt (3.8%), and looks cheap at a 36% discount to forecast net asset value (NAV). |
691p/501p
670p |
Costain (COST)
Engineering and construction |
The Times |
The engineering services firm has £100m cash in the bank and its focus on large clients, such as Crossrail, means that 90% of the workload is in repeat orders. Buy on further weakness. |
248p/174p
217p |
Domino’s Pizza (DOM)
Retail |
Investors Chronicle |
Poor weather this year, along with the summer’s sporting events, should help this fast-food chain post healthy figures at 23 July first-half results and could lead to a share-price boost. |
527p/381p
493p |
Entertainment One (ETO)
Distribution/wholesale |
Shares |
The entertainment distributor has growth prospects in Asia. A 28% fall since December is a buying opportunity on a current year p/e of nine. |
209p/129p
151p |
Gulf Keystone (GKP)
Oil and gas |
Investors Chronicle |
A 60% share-price fall since February looks overplayed as this oil explorer has had success at its Shaikan discovery in Kurdistan. Buy on a 33% discount to NAV. |
450p/87p
168p |
H&T Group (HAT)
Retail |
Investors Chronicle |
Despite margin pressures in its gold business, this pawnbroker has hit trading estimates and the shares trade at an unwarranted discount to rival Albemarle on a forecast p/e of seven. |
415p/240p
260p |
Intl. Pub. Partnerships (INPP)
Closed-end fund |
The Daily Telegraph |
This infrastructure fund has raised £200m to invest in schools and power transmission. It’s an income play on a prospective yield of 5.2%. |
122p/111p
117p |
Liontrust (LIO)
Div. financial services |
The Times |
Liontrust has grown funds under management from £1bn in 2009 to £2.1bn now and is targeting £7bn in the next few years. It’s a speculative punt on a sector discount p/e of 12.5. |
125p/57p
97p |
MDM Engineering (MDM)
Engineering and construction |
Investors Chronicle |
This Africa-focused mining engineer has had a strong 2012, with a robust cash position and significant project pipeline. A prospective p/e of nine looks undemanding with a yield of 5%. |
149p/93p
146p |
Melrose (MRO)
Misc. manufacturing |
The Daily Telegraph |
This turnaround firm, which has created £1.5bn of shareholder value since 2003, is in talks over a £1.3bn deal for German firm Elster Group. Buy on a 2012 p/e of 12.1 and yield of 3.5%. |
446p/265p
371p |
NCC Group (NCC)
Computers |
Shares |
Buy this IT testing and security specialist ahead of 5 July finals, as a share-price fall on a botched software project is overplayed and a modest p/e of 14.9 should soon correct itself. |
922p/580p
750p |
Real Good Food Co (RGD)
Aim |
The Times |
A deal with Mauritian sugar producer Omnicane will help this food wholesaler secure supply and reduce a £25m debt pile. The shares look undemanding on a p/e of eight. Buy. |
74p/34p
57p |
Restaurant Group (RTN)
Retail |
Shares |
The Frankie & Benny’s owner looks set to pay a special dividend of up to 25p per share within 12 months. Added to the 11.5p ordinary payout, that would mean a yield of 12.5%. Buy. |
313p/238p
292p |
Rio Tinto (RIO)
Mining |
The Daily Telegraph |
This miner is spending $4.86bn to expand iron-ore production, especially at its Australian Pilbara mine serving the growing Asian market. The shares look cheap on a 2012 p/e of seven. |
4,624p/2,637p
3,095p |
Rolls-Royce (RR)
Aerospace/defence |
The Times |
This power systems manufacturer has an order book of £62bn, with over half in more steady and visible service contracts. A 2012 p/e of 15 isn’t cheap, but the shares remain attractive. |
868p/519p
840p |
Serica Energy (SQZ)
Aim |
Shares |
This North Sea oil firm looks undervalued and could benefit from the continued merger and acquisition speculation in the region following purchases by Cairn Energy and Premier Oil. |
47p/14p
23p |
Utilitywise (UTW)
Environmental control |
Shares |
The energy consultant is benefiting from growing demand to reduce energy costs, with 1,000 new customers every month. Pre-tax profit is forecast to nearly treble between 2012 and 2014. |
64p/60p
62p |
Weir Group (WEIR)
Machinery diversified |
The Times |
The pump maker’s mining business (52% of 2011’s operating profits) is benefiting from strong aftersales, which could help it hit 2012 forecasts. On a p/e of ten, there should be further to go. |
2,254p/1,332p
1,558p |
| Sell |
| Company |
Publication |
Reason |
Price tipped |
Home Retail (HOME)
Retail |
Investors Chronicle |
Use a 25% share-price rise to sell the Argos and Homebase owner. Good news on Argos looks overplayed and Homebase is facing tough conditions and saw like-for-like sales drop 8.3%. |
167p/68p
93p |
Lloyds Banking (LLOY)
Banks |
Shares |
This bank has £23bn exposure to the five weakest eurozone countries, including £6.5bn to Spain, where bond yields have hit record highs and a default may be on the cards. Sell. |
51p/22p
30p |
Mulberry (MUL)
Retail |
The Daily Telegraph |
This luxury goods group has rocketed since 2009 and the shares now trade at eye-watering levels on a March 2013 p/e of 27.7. There’s growth potential, but the market looks fickle. Avoid. |
2,500p/1,263p
1,566p |
TalkTalk Telecom (TALK)
Telecommunications |
Shares |
Broadband price wars and delays to TV service YouView could hinder this telephone and broadband provider’s growth plans and earnings forcasts. Use a 21% three-month gain to sell. |
180p/116p
170p |
Vitec (VTC)
Misc. manufacturing |
The Mail on Sunday |
Shares in this firm, which makes the high-tech camera equipment used to film football games, have risen 78% since August 2008. Investors should look to sell 50% and take profits. |
700p/488p
660p |
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* 52-week high/low |