Friday tips round-up: BTG, SAB Miller, Electrocomponents

24th May 2013 11:19

Shares of BTG have been held back since the start of the year due to concerns regarding impending acquisitions. Nevertheless, now that these - and a 106.3m pound capital issue - are out of the way the stock should progress, says The Times's Tempus. The company will acquire North America based Ekos and one of the business units of Nordion, for a total amount of up to 280m pounds. That for a company with a market capitalisation in the 1.1bn pound area. Critically, non-organic growth is a pillar of the firm's strategy - although this is its most ambitious step yet. Shares of SAB Miller command a premium thanks to its exposure to emerging markets. However, recent trading in Colombia does not bode well. This is significant because the country is the biggest driver of the outfit's Latin American business - which in turn accounts for a third of group operating profit. Then there is the pressure which the falling exchange rate of the South African Rand is exerting on the group's margins. That country is responsible for one-fifth of group operating profit. Yes, volumes grew by 3% in the fourth quarter and the company will continue to pare costs, but much of this is already built into the share price. SABMiller now trades on 19 times earnings, a 10% premium to Heineken and in line with AB InBev, which is suffering in Brazil. "That looks fair. SABMiller is not that special," says the FT's Lex column. Who said FTSE-250 listed companies are oriented mostly towards the domestic UK economy? Electrocomponents, the distributor of electrical components and equipment, is now specifically targeting global growth. The company is now aiming for group-wide organic growth of 5% to 8% a year over the medium term, up from an average of 4% over the past six years. At 15.5 times next year's earnings the shares are not cheap. However, while its profits did take a hit last year as global manufacturing slowed current cost-cutting measures will help the bottom-line as soon as the sector comes back. Hence, Questor keeps a hold rating. 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.