Thursday tips round-up: GlaxoSmithKline, Prudential, BG

29th Oct 2009 06:02

Andrew Witty, the chief executive of GlaxoSmithKline, said in July that he did not know whether the drugs giant expected to make a lot of money from swine flu. The company's third-quarter results and outlook have banished any doubt that it has. Yet looking beyond the pandemic, Glaxo is making progress in shifting its business away from dependence on blockbuster drugs such as Advair, its asthma treatment, and towards driving growth from new products, emerging markets and its consumer business. Trading at 10.5 times 2010 earnings forecasts and offering an attractive dividend yield of 5 per cent, it could be time to buy into Mr Witty's strategy, thinks the Times. The Telegraph agrees. It says trading margins in latest quarter were 31.1pc, below consensus of 31.4pc, but the paper respects the determination with which Mr Witty is taking on what was deemed impossible - turning the direction of the GSK juggernaut. Buy. Prudential took a bit of a battering on the stock market yesterday, and it was a rough way to welcome Tidjane Thiam, who was presenting his first financial results since taking the top job. But the Independent says the firm's strategy looks sound. With a respectable prospective yield of 4 per cent and attractive growth prospects, it believes the shares' fall is a strong buying opportunity.BG Group shares are trading at a high valuation already, but the company was one of Questor's star picks for 2009 and it still offers a relatively safe home for your cash. Despite the difficult market backdrop, BG's presence in liquefied natural gas (LNG) and offshore Brazil means it is operating in growth markets. The Telegraph feels an investment is fairly secure, so buy. Despite anticipating a painful end to the year, Wolfson Microelectronics' third-quarter results did show progress. It has maintained gross margins at 51 per cent and, more importantly, has overhauled its product line. It has also signed a number of new deals with companies including Nokia to build its chips into new products. All that bodes well for 2010. Yet visibility is low at this point in its recovery, so hold for now, advises the Times. Carpetright reckons that even if monthly mortgage approvals bump along at the historically low level of 38,000 seen in August, underlying sales could grow by 12 per cent in the second half. Given this, the Independent remain firm long-term buyers of Carpetright shares, but as they now trade on a 2010 multiple of 23.7, compared to 13.4 for the retail sector, it says hold for the next six months.The property and asset management group Rugby Estates struck an optimistic note with its interim results yesterday. Of course, with Rugby's shares up by about 25 per cent since January, cautious investors may still wonder whether it is worth piling in. the Independent thinks it is. If there is a market correction, it will hit speculative plays more than Rugby, and when the dust settles the stock should perform while others suffer, the paper says. Buy.In December last year, Andrew Page, chief executive of The Restaurant Group (TRG), the Garfunkel's and Frankie & Benny's operator, reflected the prevailing mood when he declared: "I've never seen anything like this. It's going to be bloody in 2009." The two thirds rise in the shares since then suggests that his pessimism was overdone. The shares are trading on a multiple of 12 times full-year earnings, yielding 4.2 per cent, so hold says the Times.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.