Broker tips: Anglo American, Petra Diamonds, Water stocks

13th Jun 2014 12:55

Credit Suisse has maintained a 'neutral' stance on Anglo American but has said that the potential wage settlement with employees at its platinum operations in South Africa would be a positive for the company after 20 weeks of strikes.However, the bank explained the importance of the offer, saying that the companies' thin margins mean that they have "very limited capacity to shoulder double-digit wage increases in the current platinum environment". The level of increase will have a bearing on Amplats' ability to divest marginal assets further down the line, it said.Forecasts for next year at Petra Diamonds now look conservative after the discovery of an "exceptional" 122.52-carat blue diamond, according to Canaccord Genuity. The broker maintained a 'buy' rating and 195p target price for the diamond miner.Canaccord said that while estimates for the value of the diamond would at this stage be speculative, it sees "meaningful upside" to its current $523m revenue estimate for the year ending June 2015.UK water stocks Severn Trent, United Utilities and Pennon offer "low-risk returns", according to Deutsche Bank, which recommended investors to buy a basket of the three stocks despite their recent strong run."With the share prices of UK water stocks rising strongly this year, our view that returns could converge down to those of UK and US peers as regulatory visibility improves has now somewhat played out. However, returns still look attractive in the current low yield environment and there is scope for bids after the completion of the review."BC