Friday tips round-up: Afren, Pennon, PayPoint...

26th Nov 2010 06:43

Oil explorer Afren's Okwok appraisal well in Nigeria established that there was a minimum economic field size of 25m barrels of oil equivalent (boe), confirming that the find is commercial.The field may be a standalone operation or it may be a satellite to the company's nearby Ebok field, which is expected to enter production soon. Once production from this field starts it will more than double the group's current oil output. The shares remain a buy for their increasing production and exploration upside, as the company has a significant drilling programme planned for 2011, says the Telegraph.Caterer Compass has proved very defensive through the downturn, but now appears to be looking for growth. There are plenty of outsourcing opportunities in the global food service business but the group is building its exposure to associated support services, too. On a September 2011 earnings multiple of 13.7 and a yield of 3.2% on its rebased dividend, buy says the Telegraph.The case for civil engineer WS Atkins rests on a belief that much of its future workload in the UK, on rail, in energy and in nuclear power, will have to be done eventually come what may. This year and next will be flat, the shares selling on about ten times earnings for both. The potential from the US and for earnings growth thereafter is not yet in the rating. A strong hold says the Times.Shares in PayPoint jumped 30% on the day the National Lottery Commission (NLC) said it was provisionally minded to turn down potential rival Camelot's plan to offer activities such as mobile top-ups, bill payments and other services through its lottery terminals. PayPoint trades on a multiple of under 10 times UBS's forecasts for next year and is not an expensive stock. But it will only tread water over Christmas and in January as the market awaits the NLC's final ruling. Hold for now says the Independent.The problem for PayPoint investors is that, while the company has come from nowhere to build a business with net revenues up 7.6% to £38.7m in the first half to end-September and operating profits 4.4% higher at £15.3m, no one can quantify what the damage caused by Camelot's entry into its market would be, or indeed if it will ever happen. The shares are on 10 times this year's earnings. A gamble, undeniably ? though rather less so than a lottery ticket suggests the Times.Pennon is not an unattractive stock with the highest dividend growth policy in the sector. It is the water stock most likely to be able to continue this growth beyond 2015. It is also least exposed to inflation, due to the dilutionary effects of Viridor. But, in the aftermath of the pricing debates, the sector is looking boring. Avoid says the Independent.Water utility Pennon offers the chance of further capital growth from waste arm Viridor. For those who regard a pure income stock such as United Utilities as being too dull, Pennon is the one to go for suggests the Times.The outlook for the pub industry is not particularly rosy, however, with tax rises, job losses and the Government's austerity programme hitting customers' pockets. Young's is a sector star so, while buying now is risky, keep holding 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.