Wednesday tips round-up; Pearson, Greggs, Bunzl

21st Oct 2009 06:45

Pearson faces pressures in financial advertising at the FT Group while Penguin's performance is flat. However, underpinned by US stimulus spending and the natural hedge between higher US college enrolments and weaker US school budgets, Pearson should continue to prosper in North America while its other overseas businesses mature. At 858½p, or 14 times earnings, hold says the Times.On Tuesday, Greggs, the sausage roll and pasty retailer unveiled a very ambitious - but achievable - expansion plan. The market did not react well to the news, but this has provided a buying opportunity. The shares are trading on a December 2009 earnings multiple of 13.8 times and yielding 3.5%. Good value. Buy says the Telegraph.JSM Indochina, an AIM-listed property fund focused on Cambodia and Vietnam, does not look like the typical target of activist investors, but Passport Capital, a San Francisco-based investor holding a 13.4% stake, is to requisition a special general meeting. In short, it wants Craig Jones and two other directors to be removed and replaced by its nominees; surplus cash to be returned to shareholders; and a comprehensive review of the company's investment strategy. However, at 69c, with Mr Jones sitting on 14.6% and with the voting intentions of other big shareholders unclear, there is better value elsewhere. Pass says the Times. Bunzl does not provide its clients with their main stock in trade but all the consumables they use in day-to-day business, be that coffee cups, carrier bags, labels, toilet rolls and cleaning items. The benefit to the consumer is that Bunzl can source its goods internationally, saving costs, and provide a one-stop shop for its clients to order such goods. The shares are trading on a December 20099 earnings multiple of 12.5 times, falling to 11.8 next year. The yield is 3.3%. Buy says the Telegraph.Xstrata's production numbers were a mixed bag: on the one hand, overall output was up thanks to a 9% jump in coal production, while the group hailed its financial performance. "Xstrata's operating and financial performance continues to be strong, and the company's financial position remains robust," it said in a statement. On a 2010 price earnings ratio of 11.8 times, Xstrata comes at a discount to other miners, and this, along with current macroeconomic conditions, persuades the Independent to recommend buying. The group must address the longer term, however, it adds. Buy.After upgrading forecasts on the back of yesterday's trading statement, Cazenove now has car dealer Inchcape trading on 13.9 times next year's forecast earnings - down from 19. That's still not cheap enough for the Independent. Credit the company for outperforming, but remain on the sidelines for now. Avoid.Last week's in-line trading update from Mothercare demonstrated the international growth potential this company has. The current-year earnings multiple is 18 times, falling to 16 times next year, which is high, but this reflects the group's strong international growth profile. Buy says the Telegraph.Independent TV producer Boomerang Plus will be filming exclusively at this year's Freeze festival, which has Olympic-level ski and snowboard jumping and cutting-edge bands near Battersea Power Station. Boomerang has no bank debt and constant revenue streams from S4C. But like the extreme sports nuts, take a leap into the unknown and buy suggests the Independent.Record's longer-term prospects remain promising. Its traditional rivals among investment banks have retrenched over the past year, it is sitting on £30m of cash and the long-run "excess" returns from currency investing indicate that it should continue to grow as a proportion of professional portfolios. At 80¾p, or 13 times earnings if cash is ignored, and yielding 5.7%, buy 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.