Sunday tips round-up: Reckitt Benckiser, Dunelm, European Goldfields

10th Jul 2011 10:08

Reckitt Benckiser, the Cillit Bang and Durex maker was said to be in the sights of Unilever or US peer Procter & Gamble. Questor from the Sunday Telegraph takes such talk with a pinch of salt. Not only has this speculation been around for some time, analysts reckon that such a move by either company could be derailed by anti-trust issues. Questor upgraded the rating on the shares to buy after it was revealed that like-for-like sales growth accelerated to 5pc in the first quarter, which was much higher than expectations. The shares had also dived after Bart Becht, its long-serving and highly remunerated chief executive, said he would step down in September. The shares were first recommended on March 6 2009 at £24.96. They are up 39pc compared with a FTSE 100 up 70pc from then. Questor upgraded the view to buy at £32.90 in April and the rating remains a buy, despite the gains.The retail environment, as we noted earlier, remains clouded; in fact, the cloud seems to be turning a shade darker every day, with news of company administrations or restructurings or another dip in the mood ofthe consumer, said the Independent on Friday.But there are bright spots. Dunelm, the homewares retailer, cheered the markets on Thursday by announcing an uptick in sales. This is no mean feat, particularly in light of the turmoil elsewhere. Adding to the attraction is the fact that Dunelm boasts a strong balance sheet, ending its financial year with nearly £32m in cash.The valuation, which, at under 14 times this year, hardly looks prohibitive. That figure falls to under 13 times on estimates for next year, underscoring the investment case, in our view. Buy, recommends the Independent.European Goldfields' shares jumped on Thursday on speculation coming from Greece that the permit was on the verge of being issued. On Friday, it was confirmed. The decision has given Goldfields permission to continue operations at its 95pc-owned Stratoni project. It also approved the next stage of the Olympias project, which involves the mining and processing of ore and treatment of the concentrate. Goldfields is also awaiting permission for its Certej project in Romania. Once these projects are up and running, the company will be the largest gold producer in the European Union.The company is expected to move into profit in 2013 and the average price target of the 12 analysts with buy ratings on the shares that are covered by Bloomberg is £11.28. The shares remain a speculative buy, so should be avoided by widows and orphans, recommends the Questor column in the Sunday Telegraph.BCPlease 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.