Friday tips round-up: Hammerson, McBride, IMI

10th May 2013 07:40

FTSE 100 retail property developer Hammerson yesterday delivered a mixed trading update. However, the company does seem to have a good long-term strategy in place, of exiting the London office market in favour of local retail space, which - it must be said - goes against current received wisdom. To that one must add the strong pipeline of assets coming along. In fact, the company is forecasting earnings growth of 25% over the next three years. Nevertheless, the fact that it is now almost trading at its net asset value means that immediate progress may be limited. Own label goods maker McBride has issued two profit warnings in the last eight months, as a result of heavy promotional activity by supermarkets and their well known penchant to look to suppliers to fund themselves in one way or another. Even so, the rate of decline in sales seems to be slowing - a positive first step on the road to financial health. As well, the firm is keen on slimming the amount of unprofitable work that it does and sale of its core and high-growth categories are doing well enough. In parallel, it is investing in higher margin product lines and expanding in Eastern Europe and Asia. All of those initiatives, nevertheless, are a long-term story while the stock is trading at 15 times this year's earnings. Even with a dividend yield above 4% this suggests no reason to chase for now, The Times believes. Engineering giant IMI´s strategy of focusing and positioning itself to take advantage of long-term ´mega trends´seems to be paying off. Thus, yesterday's trading update was reassuring, after some less than upbeat updates from some of IMI's engineering peers. In the first four months of the year, trading was in-line with management expectations, with group revenues down 1%, or 3% on a like-for-like basis. The company said it was "confident that [it] will deliver progress over the full year in 2013". No surprise then, perhaps, that analysts opted to maintain their forecasts, which led to a so-called ´relief' rally in the shares. This is good news, says the Daily Telegraph´s Questor team; but, with the shares trading on a 2013 earnings multiple of 15.1, falling to 13.8, and yielding 2.7%, Questor says hold.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.AB