Friday tips round-up: Ashtead, Oracle, Gulf Keystone

21st Jun 2013 06:43

Equipment rental group Ashtead Group delivered record pre-tax profits on Thursday thanks to the strong performance of its US operation Sunbelt. However, Sunbelt revenues are not going to continue to grow at three times the industry average, according to The Times' Tempus column. But while growth may not be as stellar in future, there is still room for modest improvements. "For now, Ashtead's extraordinary growth continues. The revenues of Sunbelt, the US operation that provides 85% of revenues but almost all profits, rose by 23% in the fourth quarter," Tempus said.Oracle needs to take a good hard look at itself, according to the Financial Times' Lex column. The company has an excellent history as the inventor of the cloud technology but its stock is no longer growing. The cloud accounts for just 3.0% of sales and the group's hardware business is shrinking fast. Revenue growth has averaged 1.0% over the past seven quarters and it has missed expectations on the top or bottom lines three times in the last year or two. Thursday's miss saw its stock decline 8.0%. "You're a value stock now, old buddy. Set expectations low and beat them," Lex said. "Moving to the New York Stock Exchange is perfect for you. That's where you legends belong. It's like the Senior Tour. And it's great that you are doubling your dividend - but it will still leave you with a yield of just 1.6%. At your age? With your cash flows? It's time to think about 3.0% at least. That's a better idea than your big buyback plan."Gulf Keystone Petroleum has over-promised and disappointed in the past, Tempus said. For example, the first oil was supposed to be produced in Iraqi Kurdistan last year but now it's not expected to come until the next few weeks. Nothing is certain in Kurdistan, making the company a "speculative punt". Gulf on Thursday reported an increase in its 2012 losses to $81.8m post-tax compared to $62.4m a year earlier. Malcolm Graham-Wood at VSA Capital, who has been out in Iraqi Kurdistan recently, predicts that once production is established, the company will be bought by one of the big oil companies increasingly active there. RDPlease 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.