Friday tips round-up: Costain, Diageo, Menzies

26th Jun 2009 06:44

Costain shares are pricey and each time the contractor puts out one of its impressive updates, the share price increases by a little less than last time.The truth is that everyone expects Costain to keep churning out the good results and the stock has become stymied. The Independent, though, argues that the economy is sickly and that investors should still be chasing stocks like Costain. Buy.John Menzies has cut its debt and removed plenty of cost, and while newspapers sales continue to struggle, Menzies benefits from the inevitable hike in cover prices. The company will also benefit from recent acquisitions and will take its market share in the newspaper distribution sector up to about 45%.Menzies is not a conviction buy, but the share price will continue to rise. Buy says the Independent.Cohort is a very resilient business, and for those not squeamish about investing in defence companies, the group is a good punt. That the stock trades at "undemanding" levels, according to brokers. Buy says the Independent.At 169¼p, or 16 times earnings, software group Misys is not obviously cheap ? and the pace of American healthcare reforms could yet disappoint. But in the belief that it will seek to extract value from 57% owned US business Allscripts in the medium rather than long term, the shares should be bought on the dips says the Times.If the stock market was unsettled by yesterday's dividend cut from DS Smith, its first in quarter of a century, it failed to show. Shares in the paper and packaging group gained more than 10%. Assuming that current-year profits ? forecast at £44m ? will prove the low-water mark, the shares, at 68½p, or less than nine times earnings, are a buy on weakness says the Times.Diageo shares have underperformed other defensives over the past six months, but the company generates good cash flows and its dividend is safe. This has created a buying opportunity. The shares are currently yielding 4.4%, but the group has a progressive dividend policy of raising the payout by 5% each year. The company generates a substantial amount of cash which will support the valuation but don't expect astronomical capital gains. Buy says the Telegraph.The Telegraph also rates funeral services opeartor Dignity as a safe home for your money. The shares are trading on a December 2009 earnings multiple of 15 times, falling to 13.7 in 2010. They are also trading on a prospective dividend yield of 2% and the company is extremely cash generative. The shares remain a buy. At 27½p, Clinton Cards shares have risen six-fold from December's low. However, with trading still subdued, the rating no longer niggardly ? some 11 times earnings ? and no dividend on offer, they have run far enough for now. Pass says the Times.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.