Friday tips round-up: BAE Systems, Imagination, Premier Farnell...

9th Sep 2011 06:47

Defence Group BAE Systems has also seen its shares decline recently, driven down by weakening sentiment and concern about global defence budgets, notes the Questor column in the Telegraph. The falls mean that the shares are now yielding an impressive 6.8pc, rising to 7.1pc next year, offering a great opportunity for income seekers. The prospective dividend cover is more than the group target of about two times, so the payment appears secure. Defence budgets are under pressure in austerity times but, taking a longer-term view, the world is unlikely to become any safer. The shares are trading on a December 2011 earnings multiple of 6.9, falling to 6.5, which appears derisory, especially when US peer Lockheed Martin is trading on a multiple of 9.7, falling to 8.3. Shares in BAE Systems remain a buy, says the Telegraph.Imagination put out a sprightly interim management statement yesterday which revealed that it "continues to see high levels of licensing and design activities with both existing and new partners", says the Investment Column in the Independent. Its chief executive, Hossein Yossaie, had previously predicted Imagination chips would be shipped in one billion units within five years, and yesterday it re-affirmed that ambitious target. That said, the group failed to provide a particularly detailed view of its royalties revenues, although management expects strong growth next year. On the downside, the management noted that economic conditions have an impact on a market that is becoming increasingly cut-throat. Yet it is important to note the robust licensing pipeline and management's comments on royalty revenue growth. There should be more to come from Imagination, in our view. Buy, suggests the Independent.Figures in July from Premier Farnell for the first quarter, which indicated some slowdown after previous sharp growth, prompted a 20 per cent crash in the share price ? a collapse that has continued since, says the Tempus column in the Times. Premier shares are now back to the level they were at the start of 2010, which seems perverse. The electronics components company yesterday announced its best-ever quarter, the second since a transformation programme aimed at cutting costs and moving sales onto the internet started four years ago. Yet Premier shares fell by 13½p to 158p yesterday, with analysts taking a largely negative view on prospects. The shares sell on about nine times this year's earnings. This would appear to factor in a fall in profits, rather than a more likely flat outcome, and there is that dividend yield. The shares look cheap long term if you are not too pessimistic on global economic trends, though it may take the market some time to come around to this way of thinking, suggests the Times.As the ongoing sovereign debt crisis translates to heightened market volatility, now is the time to consider a defensive element to your portfolio. And Bic, the French multinational, is one of the best names out there, suggests the Scotsman. The company is a leading manufacturer of stationary items, lighters and shavers. Its products are simple, well-made and durable, with a middling price range and household brand name. As such, its goods are desirable to consumers from across the income spectrum. The firm recently created a separate promotional products division after it purchased bankrupt US group Norwood PP. This business is taking time to restructure, and has been adversely affected by the global economic slowdown. Nonetheless, we think this area will start to pay handsomely when companies once again spend on advertising. Buy, the Scotsman recommends.BCPlease 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.