Friday tips round-up: BP, Diageo, Tomkins

7th May 2010 06:54

Is BP going to go bankrupt? That is the question for investors and putative investors to answer. Certainly the immediate outlook is bad. The fatal explosion and subsequent sinking of the Deepwater Horizon rig in the Gulf of Mexico two weeks ago is an unmitigated disaster.But chief executive Tony Hayward has made fantastic progress since taking over, centralising management, improving BP's safety record and producing a series of sector-beating results. Add to that the world's ever-growing thirst for oil, and it looks unlikely that Deepwater Horizon will spell the end of BP altogether. In that case, this is without doubt the time to buy says the Independent.It has been a tough few months for the Finnish nickel group Talvivaara Mining. The company's first-quarter numbers yesterday showed that it produced 628 tonnes of nickel in the first three months of the year, recording a net loss of €17m (£14m). The figures were undoubtedly disappointing, but there is still value in the shares, which trade on a 2012 forecast multiple of just 3.2 times. Wait for now and see if the company can have a better second quarter. Hold says the Independent.Diageo, the Guinness and Johnnie Walker Black Label maker, yesterday reported a 12% jump in net sales in the three months to the end of March ? the group's third quarter ? as wholesalers and retailers started restocking from the Diageo drinks cabinet to meet a nascent improvement in consumer demand. At £10.83, Diageo shares are trading at 13 times next year's earnings ? a discount to both the sector and their long-run average ? and provide a 3.8% yield. Hold says the Times.Tomkins, the automotive and industrial engineer, which does the majority of its business in the US, took the City by surprise yesterday in reporting first-quarter operating margins that breached 10% for the first time in five years. A quarter of Tomkins's business is in US construction materials, a sector that is still hurting. But the shares' still-unspent potential as a recovery play and its restructuring into a leaner beast should not be ignored. Buy on weakness says the Times.In terms of enterprise value to earnings, Tomkins is one of the cheapest stocks in the sector. If the share price keeps rising Tomkins could find itself in the company of the blue chips. Brokers estimate that it could claim a berth in the FTSE if the price rises to 290p. That would bring new investors to the fore. Buy says the Independent.Like other UK infrastructure funds, 3i Infrastructure sits at the dull but reliable end of the investment scale. It tends to generate steady capital growth in line with increases in net asset value (NAV) per share ? which rose 4% on the year ? but the greater attraction is a dividend yield of 5%. Overall, 3iI says its pipeline of potential investments is twice as big as it was last summer. For now, 3iI, unlike its immediate peers, trades at a discount to historic NAV ? reported at 113p. At 110p, buy for income says the Times.Shares in veterinary products group Dechra have been very volatile over the past few months. However, yesterday's update showed good progress, despite a slight slowdown in revenue growth. The company has made good progress on approvals for its products in the US and Asia - and this bodes well for future growth. The shares are trading on a June 2010 earnings multiple of 16.9 times, falling to 14.4 next year. The yield is 2.2%. Buy says the Telegraph. One company hoping to make hay from the increasing use of wireless technology is microchip manufacturer CSR. The company produces chips for applications such as wireless internet, global positioning systems (GPS) and Bluetooth. First quarter margins were helped by the product mix, with more sales of higher-margin GPS chips and less exposure to handsets. Trading on a December 2010 earnings multiple of 15.1, falling to just 11.4 next year, the valuation does not seem too demanding. A return to profitability is also welcome and the shares are a buy says the Telegraph.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.