Tuesday tips round-up: Smiths, Weir, Xchanging...

2nd Nov 2010 06:46

Smiths, the technology group, enjoyed steady gains on the stock market yesterday as investors woke up to what could be an unexpected boost to its bottom line. The interest was triggered by the recently foiled cargo bomb plot, in which explosive devices were posted in Yemen with the freight firms UPS and FedEx. On the plus side, besides the opportunity presented by the potential for greater demand for the air freight market, Smiths is investing in higher-margin products, something that bodes well for the medium to long term. Moreover, at less than 13 times full-year earnings for 2011, the stock isn't exactly expensive. Buy says the Independent.Weir's nine-month statement pretty well guarantees that pre-tax profits will come in at about £288m. This would put the shares, after yesterday's 21p fall to 1,537p, on almost 16 times this year's earnings and 14 times next. A touch pricey to buy, but worth holding says the Times.BG Group is going ahead and spending $15 billion (£9.3 billion) building a plant in Queensland that will take the locally derived coal seam gas and, from 2014, convert it into LNG.This is a huge play by BG on the commodities cycle and the continuing strength of the Chinese economy, and so far the omens are good. BG will publish third-quarter figures today that should show a 10% rise in operating profits to about $1,554m. Still a strong hold says the Times.Intertek, the testing company for products from food to toys, has proved to be a safe pair of hands for investors this year. After touching a lowly 1150p in early February, Intertek's shares have soared by more than 60% since then. Yesterday, the company unveiled two small acquisitions that will bring Intertek new research and development services, as well as cross-selling opportunities. The shares now trade on a 2011 multiple of 21.2 times forecast earnings. Good company, but at that price, hold says the Independent.Xchanging has been under a cloud since a worrying debate about its accounting policies earlier this year. Boss David Andrews responded assertively, calling in accountants for a "re-audit". Trouble is, any company involved in outsourcing (Xchanging handles business processes such as invoices and payroll) starts to scare investors when accounting issues are raised. The group continues to win contracts and is too cheap at the current price. So buy says the Independent. Hikma said on Friday it was paying $112m for the US injectables business of Baxter, or about seven times' earnings, which is a good price in pharma. It makes the company, which has ambitions to double in size every four years, the second-biggest in the area of injectables in the US. Such growth does not come cheap; brokers have the shares on 23 times' this year's earnings. Up with events 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.