Thursday tips round-up: Imperial Tobacco, Sage, ICAP...

3rd Feb 2011 06:44

There has been a shortage of good news for investors in Imperial Tobacco and other cigarette makers. Shares in the sector were hit recently by claims that the habit could die out within 40 years. There is little sign of that in Imperial's latest figures.Imperial plans to raise the ratio of earnings paid out in dividends from 47% last year to 50%. This suggests dividends this year of about 97p a share and a yield of about 5.1%, and there is always the possibility of share buybacks. Nice income if you can get it says the Times.The Independent adds underlying revenue growth of 5% in the fourth quarter points to Imperial Tobacco's success in pushing through price increases. The FTSE 100-listed tobacco maker trades on a forward earnings multiple of just 9.5 times. Buy, it says.Sage provides business management software and services to help small and medium-sized companies get on with running their operations. The long-term picture looks good, but margins are expected to be fairly flat this year. Valued at 14 times forward earnings, Sage looks well priced. Hold for now, but this could evolve into a buy depending on the success of the new strategy, the Independent suggests.Derviatives broker Icap is one of those companies that likes to ensure there are not too many nasty shocks on the stock market by telling analysts exactly what to expect. Guidance at the halfway stage in November was that pre-tax profits would come in at between £333m and £357m this year, and this is duly repeated. Icap's shares, on less than 14 times this year's earnings, are probably due a break, but remain a long-term hold says the Times.Despite a 40% leap in the price of corn, food ingredient group Tate & Lyle achieved slightly higher margins on its annual fixed-price corn sugar contracts. It is welcome news to see the company is able to pass on these rising costs to its customers. There has been talk that Cargill, a private US food group, was circling the company - with analysts mooting a possible take-out price as high as 750p a share. Otherwise, the shares are trading on a March 2011 earnings multiple of 12.7 times, falling to 11.5, which looks pretty full at the moment. The yield at the current price is 4.4%. Hold says the Telegraph.Sausages group Cranswick posted a sizzling update, with like-for-like sales in the third quarter rising 5%. The shares are trading on a March 2011 earnings multiple of 11.4 times, falling to 10.7 in 2012. The prospective yield is 3.3%, rising to 3.5% next year. Buy says the Telegraph.One surprising trend to emerge from the recession is the resilience of the London economy, and of those small to medium-sized businesses that many are hoping will fuel future economic growth. There are about 200,000 of these in the capital, and 4,000 count Workspace as their landlord. An interesting play on the health of the London economy and the property market says the Times.Haulier Wincanton trades on a woefully thin valuation of about 7 times forward earnings. While the current trading picture is less than cheerful, signs of a successful restructuring in coming months will help the stock to climb higher as the market regains its confidence. Buy says the Independent.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.