Friday tips round-up: Croda, Restaurant Group, Shell

2nd Nov 2012 06:41

Tempus in The Times writes that Croda is not as recession-proof as we thought, reporting weaker than expected third-quarter results. It has reported a stronger start to the fourth quarter, although it still cautioned that it expected its performance in the final three months of the year to be similar to the third quarter. The slowing of profits growth in consumer care, allied to a two per cent fall in its performance technologies unit, which makes things like lubricant additives, initially spooked the market. Still, provided October's sales rebound continues, there is no reason for investors to lose faith. Croda's focus on high-value niche markets with innovative technologies gives it pricing power while its strong cash generation and minimal debt burden means it can continue to make bolt-on acquisitions while considering share buybacks.Tempus says that Restaurant Group, which runs Frankie & Benny's eateries at many of the country's biggest cinema complexes, reported record trading for the brand last weekend thanks to Skyfall and is licking its lips over the forthcoming launch of The Hobbit and the next installment of the Twilight Saga. But yesterday's trading update suggests Frankie's is by no means reliant on a strong film schedule. Andrew Page, Restaurant Group's Chief Executive, said that the chain's trading had held up well during the summer despite a weak film programme and the rival attractions of Euro 2012 and the Olympic Games. The shares, up 2.2% to 383p, are trading on a chunky 16 times' this year's earnings, but with a strong balance sheet and good cashflow, Restaurant Group is proving one of the recession's winners. Hold.Royal Dutch Shell has ambitious plans to increase production over the next few years, and despite investor fears that the level of investment needed will crimp returns, Questor in The Telegraph feels confident this is the correct strategy for Shell to pursue. The most important thing for investors to consider about Shell is its cash generation. The company's stated strategy is to improve cash flow by 50% to $200bn over the 2012-15 period. The quarterly dividend was increased by 1c to 43c and it will be paid on December 20th. The shares trade without entitlement to this payment from November 14th. The prospective yield in 2013 is a healthy 5%. The company has the scope to increase its payments, despite its ambitious capital expenditure plans. Gearing stood at just 8.6%, down from 10.8% a year ago, so borrowings are very low. The shares remain a buy for income and delivery on strategy.CMPlease 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.