Free Stock Tips

Brokers’ Notes

Evolution Securities upgraded its recommendation for the food supplier Cranswick (CWK) from “add” to “buy” and increased its target price from 900p to 940p. The broker thinks the firm’s recent underperformance reflects investors’ concern over the potential impact of the wheat price spike in the company’s margins. However pig prices actually remain down 5% year-on-year, and increased pig supply in the UK is likely to keep prices in check over the medium term. The relatively benign input cost outlook increases Evolution’s confidence that consensus forecasts are likely to move upwards as the year progresses, driving positive share performance. Cranswick shares fell by 10p to 850p.

Arbuthnot re-iterated its “buy” rating for Spectris (SXS) with an increased target price of 1,100p, up from 995p. The precision instrument and controls developer appears to be set on a steady recovery course, adding back costs in a measured fashion while keeping an eye on the longer-term prospects for enhancing its product offering and market share. What’s more, following stock price increases in a number of market peers, as well as some changes in earnings estimates, Arbuthnot’s method of valuation implies a higher valuation for the business. Spectris shares rose by 11p to 1,010p.

Collins Stewart initiated coverage for the South American gold miner Minera IRL (MIRL) with a “buy” stance and 90p target price. Strong management, a successful small scale operation, advancing development projects and a large exploration portfolio make the firm a very attractive investment opportunity, particularly in an environment of rising gold prices. The broker therefore views the business as a relatively low risk play in the gold junior space with a considerable valuation upside. Minera shares finished up 0.5p at 67.5p.

Daniel Stewart initiated coverage for the mobile payment developer Vipera (VIP) with a “buy” recommendation and 21p target price. The broker sees a vast opportunity in the mobile payment market which is expected to grow rapidly from the 2008 figure of 67 million users, or 71 billion dollars, to a massive 977 million users, or 862 billion dollars, by 2013. With a proven network-agnostic technology platform and existing contracts with five major customers, Daniel believes the group is well positioned to siege this opening. The broker added that contract completion and updates on subscriber base growth remain the clear drivers of the business model and valuation. The shares remain unchanged at 9.5p.

Blue-Chips

Global miner Rio Tinto (RIO) announced plans to expand its Argyle diamond mine in Western Australia, the latest step in its plan to spend about 13 billion dollars (8 billion pounds) through to the end of 2011 to boost growth. The firm will invest 803 million dollars (522 million pounds) to develop an underground mine under the existing open pit, ramping up production from 2011 to reach 9 million tonnes of diamond-bearing ore a year within two years. The project, which was put on hold in 2009 due to the global financial crises, will expand the life of the world’s largest mine for pink diamonds to at least 2019 as the company looks to capture burgeoning demand. Rio shares added 2.5p to reach 3,622p.

Cable & Wireless Worldwide (CW.), which was linked with potential bid interest from AT&T of the US, said it signed an 82 million pound, five-year contract with the government to offer the Foreign and Commonwealth Office (FCO) telecommunications services in more than 150 countries. The contract will save the taxpayer 90 million pounds and will help reduce the flight emissions and travel costs to the FCO through an increased use of reliable video conferencing. C&W shares rose 1.9p to 73.95p.

Mid-Caps

Funds managed by Ashmore (ASHM), the emerging markets asset manager, grew strongly last year as demand for its products soared and assets prices rallied in the wake of the financial crises. The group’s total assets under management rose more than 40% to 35.3 billion dollars (22.9 billion pounds) at the end of June, from 24.9 billion dollars (16.2 billion pounds) a year earlier. The jump helped push pre-tax profits for the year up to 217.2 million pounds, an increase of 36% over the previous period. Ashmore said the growth has been driven by a near-tripling in gross subscriptions for its investments, with robust demand coming from governments and sovereign wealth funds within emerging markets themselves. “We remain confident of the company’s prospects for the new financial year and beyond”, chief executive Mark Coombs commented. The shares finished 4.9p lower at 314p.

The continued drive to promote own-brand products would see Debenhams (DEB) exceed its expectations of a full percentage point in margin improvements for the full year, the department store group announced, as it sought to play down fears that cotton-price inflation would weigh on its sales. The group reports its full-year results in October, and said that these would show no change in like-for-like sales for the year. This is in spite of a programme of store reorganisation that has reduced sales density by using more own-label brands and offering fewer third-party concessions. In light of this, headline profit before tax and exceptional items for the year is expected to be in the region of 150 million pounds, an increase of some 20% over the last year. “Our profit performance has been pleasing but we believe it is correct to remain cautious about the level of consumer confidence going forward,” chief executive Rob Templeman commented. Debenhams shares climbed 2.2p to 67.2p.

Supergroup (SGP) shares fell by 42p to 1,107p after the fashion retailer reported soaring sales underscoring its status as one of the hottest fashion labels around. The owner of the Cult clothing chain and fashion label Superdry, whose March flotation has so far been the UK’s most successful this year, announced total sales jumped by 59.8% to 32.8 million pounds in the three months to 1st August. Julian Dunkerton, the group’s chief executive, said such growth figures would be sustainable over the next few years as Supergroup rolled out franchises everywhere from South America to the United Arab Emirates. Seymour Pierce described the results as “outstanding”, given tough comparatives and the distraction of the football World Cup in June. “Our price target is raised to 13 pounds to take account of the excellent opportunities to grow the business in the UK through store opening and through on line as well as international development,” the broker added.

Hiscox (HSX) shares fell by 2p to 360p on news the insurer has agreed to sell its US animal mortality business to Markel Services for an undisclosed fee. The business which operates under the American Live Stock name and provides both equine and livestock cover, will be transitioned to Markel subject to receipt of required regulatory approvals and compliance with regulatory requirements. The group added that it will also be withdrawing from the inland marine market in response to tough market conditions. The combined income of these two lines of business was less than 20 million dollars (13 million pounds) in 2009.

Small Caps, AIM and PLUS

iEnergizer (IBPO) became the first Indian business process outsourcing services (BPO) firm to list on the AIM as the firm raised 37 million pounds on the first day. The firm, capitalised at approximately 174 million pounds, is one of the five largest initial public offerings on AIM so far this year. Commenting on this, chief executive Anil Aggarwal said, “The fact that we are now quoted in London will help to raise the company’s profile internationally and help diversity its shareholder base.” The shares remained unchanged at 140p.

Tertiary Minerals (TYM) shares rose by 0.62p to 5.5p on news the mining company has received an independent evaluation report for the Lassedalen fluorspar project in Norway detailing a historic estimate of 4 million tonnes of mineralisation, containing 1.2 million tonnes of fluorspar mineral at a grade of 29% fluorspar. Commenting on the news, executive chairman Patrick Cheetham said, “The project further establishes the company as a committed future supplier of fluorspar to European consumers which, according to a recent report by the European Commission, are facing the possibility of future supply shortages.”

Norman Broadbent (NBB) shares were up by 16p at 95p after the leadership consultancy services firm swung to a half-year pre-tax profit. For the six-months ended 30th June 2010, pre-tax profit climbed to 974,000 pounds compared to a loss for the comparable period in 2009 of 660,000 pounds on a turnover of 3.26 million pounds, down by 5%. The return to profitability was achieved through increased executive search revenues delivering higher margins, coupled with reduced costs. “The company is well set to benefit from the improved level of activity in the Executive Search market place, which is likely to require additional investment both in the UK and overseas,” chairman Pierce Casey commented.

YCO Group (YCO) shares finished down 5.5p at 19p despite the Monaco-based super yacht firm announcing a return to profitability for the half-year. For the six-months ended 30th June 2010, pre-tax profit increased to 0.5 million pounds from a 0.6 million pounds loss in the comparable period a year earlier, reflecting the benefits of the restructuring programme undertaken in 2009 as well as an encouraging performance from the brokerage division. Revenue was up by 9% to 11.8 million pounds. “The board remains confident regarding the outlook for the group for the remainder of 2010 and next year,” the firm commented.

Billington Holdings (BILN) shares fell by 25p to 125p on news that half-year pre-tax profits at the structural steel contractor more than halved against a background of challenging economic conditions for the UK construction industry. For the six-months ended 30th June 2010, pre-tax profit from continuing operations fell to 1.1 million pounds, down from 2.6 million pounds in the comparable period a year earlier, on the back of a 28% decline in turnover to 21.3 million pounds. The firm said these results were in line with expectations as it announced new strategic developments to counter the effects of the downturn.

Oxford Instruments (OXIG) shares climbed 63.5p to 431p as the high technology tools and systems company revealed that performance to date for the first half of the year exceeded expectations. This was due to the strength of both its research and industrial markets, coupled with the efficiency improvements from the restructuring programme. Consequently, the firm expects adjusted pre-tax profits to be no less than 10 million pounds, which compares to 5.7 million pounds recorded in the identical period a year earlier. Commenting on future prospects, chairman Nigel Keen said, “We remain confident in the growth potential of Oxford Instruments and our ability to produce sustained shareholder value.”

PLUS quoted company Essenden (ESS) posted a 20% increase in half year pre-tax profits as like-for like sales improved from the prior period but still remained negative. For the six months ended 27th June 2010, the bowling company revealed pre-tax profits rose to 1.2 million pounds as like-for-like sales improved to -2%, up from -11% in the comparable period in 2009. The sales trend is primarily due to growth in footfall which has grown 2.5% over the period, along with higher frequency of visits and an improved measure of customer loyalty. “We anticipate further progress in attracting customers and in securing an efficient operating business,” chief executive Nick Basing commented. “However, due to some inherited problems, some aspects of the turnaround will take time to effect.” Essenden shares rose 1.5p to 21p.