Friday tips round-up: Tesco, Barratt, Provident Financial, RBS

13th Jan 2012 06:56

The Telegraph's Questor column looks at yesterday's big news from Tesco that like-for-like sales in the UK dropped 2.3% in the final six weeks of last year. That announcement has seen the stock lose 18.5% of its value in the last 24 hours.Questor makes the point that Warren Buffet, the great shaman of the international markets and a man who owns 3.6% of Tesco, last bought the shares at 371p, they are now at 318p.The problem, argues Questor, is that while Tesco is now involved in a pitched battle on its home turf against the likes of Morrisons and J Sainsbury it cannot make the investments needed in its highly profitable Asian and European branches.The US Fresh and Easy arm is still loss making but, with sales growth of 19%, it is not a major cause for concern as of now.The big question is what, exactly, is Tesco's new Chief Executive, Philip Clarke, going to do. We won't know the answer until a new strategy is revealed in April, Questor suggests holding off the shares until the dust settles and Tesco explains plan B.Questor also casts its eye over house builder Barratt Developments which yesterday told investors total orders are up 8.1% over the same point of 2011.It is seeing growth from shared equity schemes as the mortgage market remains troubled while its "land bank" is highly profitable as the company bought land during the crisis of 2009 when prices were dirt cheap.With debt lower than forecast and the shares due to trade at 9.3 times earnings come 2013 Questors says buy.The Times's Tempus column looks at door step lender Provident Financial which rose yesterday despite announcing a 2% drop in the number of people taking up its loans.Tempus points out that the big issue for lenders like Provident is the delinquency level which tells investors how much of the loans are actually being paid back.Provident says its collection performance improved during 2011.In addition its credit card business, Vanquis Bank, which helps people with bad credit ratings get Visa cards, has seen an increasing number of deposits, enough to fund around 80% of its loans.Over the past year Provident has gained 14.5% and trades on just ten times earnings. Tempus thinks it's too risky and volatile for the average investor and advises against taking a punt.The Independent's Sharewatch column looks at Royal Bank of Scotland which announced a round of job cuts yesterday. The Indy argues the risk of government interference is too great despite the stock trading at just half the company's book value. While investors may think Lloyds is worth a punt, when it comes to RBS, the advice is: avoid.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.