Friday tips round-up: Pendragon, Centaur, ABF

15th Jul 2011 06:33

The rights issue from Pendragon, our biggest car dealer, does the job of shoring-up the finances and putting the business in a better shape to go ahead. It is also enormous, nine new shares for eight and at 10p, is a 54% discount to the last closing share price. Nick Bubb at Arden Partners is looking for £33.5 million pre-tax profit this year. The rights issue solves a lot of problems and the new shares should be taken up, but further progress looks to be slow, says the Times.Centaur Media, which owns titles including Marketing Week, surprised analysts with news of a strong end to the year, saying profits would be at the top end of internal expectations. It boasts a valuation of around 11 times forward earnings for next year, according to Altium. That is hardly expensive. In fact, given the positive update, it looks downright cheap, says the Independent.Associated British Foods is one of those combinations you would never put together from scratch today. A third of the business is the startlingly cheap Primark fashion chain; another third comes from sugar. ABF shares have fallen by 8% since Christmas and, on about 13.5 times next year's earnings, are reappearing on some analysts' buy lists. Though they have advanced some way from their low point, they should be back on your lists, too, says the Times.Fourth-quarter figures from Ashmore Group are deceptive because, of the $15.5bn (£9.6bn) increase in funds under management, almost $10bn came from the June purchase of EMM, the emerging markets equities specialist. This was founded by Antoine van Agtmael, the man who coined the phrase "emerging markets". Ashmore shares sell on about 12.6 times this year's earnings, a premium to the sector but deserved, with emerging markets back in favour. A strong hold, says the Times.That the mood among investors remains fragile was evidenced by the movement in the Barratt share price after the house builder issued its full-year trading update yesterday. There is no doubt that Barratt is among the most undervalued stocks in an already undervalued sector. And yes, long term, it has supportive fundamentals. But, as we have said before, unless credit begins flowing and the housing market shows some sustainable signs of life, we do not see how this stock will make any meaningful gains in the near term. Hold, says the Independent.The market value of Wilmington, the professional business training specialist, has tumbled since its shares hit a 12-month high of 184p in January. This is largely down to fears over the trading environment for its legal training arm, which has been hit by small and medium-sized companies cutting back on courses for conveyancing. The forward earnings ratio of 11 times, and the heights scaled by its shares recently, despite the downturn, suggests the lull will be temporary. The Independent says hold.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.