Friday tips round-up: IMI, Carillion, Premier Oil

23rd Aug 2013 07:15

Yesterday´ 5m pound acquisition of Canadian 'skunkworks' Analytical Flow Products, announced by IMI, reflects the strengths of the company. It is at the leading edge when it comes to innovations in its field - the design and manufacture of bespoke gears, as opposed to commoditised products which can be built in South-East Asia. Hence, its valuation of 16 times´ this year´s earnings, which may seem rich for an engineer. Add in a world-class Chief Executive in Martin Lamb and you have a stock in which investors should happily continue to accumulate says The Times´s Tempus. Commercial construction and civil engineering outfit Carillion´s interim figures out yesterday sent the shares packing and its stock has seen some violent mood swings of late. The latter is in part due to "read across" from recent weak performance by UK construction peer Balfour Beatty. However, the group´s claimed 5.1% operating margins are being flattered - erroneously - by gains on private finance initiative deals. As well, the company´s much vaunted 'Green Deal' has fallen through. Carillion is trading at about seven times this year's earnings and some smart commentators reckon that it's a 350p-a-share stock. We remain more cautious, and a high yield (the interim dividend is up 2% at 5.5p) may be more a warning than a "buy" signal, Tempus believes.Premier Oil reacted poorly to its half-year figures out yesterday. Little was done to allay investor fears that production guidance, which has already slipped once this year, could slide further. However, a raft of announcements due out over the coming months could spark a recovery in the share price, starting next week. That is when Simon Lockett, its Chief Executive, is expected to reveal a solution to recent problems at the Huntington field in the North Sea, on Wednesday or Thursday. As well, in the coming four months an update is expected on the Sea Lion project - offshore The Falkland Islands. There are also two key exploration announcements due in the next four months. If Premier maintains this year's strike rate of six in seven, then the Kuda Laut and Singa Lut prospects in Indonesia could add a combined 42p to the company's value. In any case, the company´s pre-tax profits were a record $215m (£137m), up from $195m, and cash generation was strong. The Daily Telegraph´s Questor rates Premier Oil [it is one of he newspaper´s favoured picks for the year] as a speculative buy ahead of next week's news, which could push the shares higher.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