Friday tips round-up: IMI, WH Smith

24th Aug 2012 07:03

The Tempus column in The Times took a look at controls and valves maker IMI on Friday morning, focusing on the group's margin target of 20 per cent in its three key divisions. 'Such forecast are all well and good until you fail to meet them', the paper said.Shares in IMI dropped on Thursday after the firm announced that its Severe Service division saw margins fall from 16% to 14% after it took on lower-margin business in China and India in the hope of gaining more profitable work in due course. Meanwhile, there was disruption from the relocation of its manufacturing facilities. Tempus also highlighted the group's guidance for organic revenue growth to slow down in the second half."The shares change hands on ten times this year's earnings, but the continuing economic uncertainty suggests little reason to chase," the column's Martin Waller said.Questor, the share tips column in The Telegraph, cast its eye over centuries-old High Street retailer WH Smith which saw shares rise to a six-year high yesterday after revealing that full-year results would be at the top end of expectations. The firm attributed its strong performance to margin gains in Travel and the improving sales trend of books on the High Street. The group also announced a share buy-back programme worth £50m."As for future growth, Questor thinks the market is under-playing the potential of the group's Travel business. This offers the real prospect of expansion into new territories where there is a high footfall, which is perfect for WH Smith's relatively low-ticket items," the paper said. In spite of the shares being up by more than a quarter than when Questor last recommended to 'buy' the shares - at 484.6p on June 12th - the column reckons that the yield, at 4.3% rising to 4.8% next year, still remains attractive. The shares are now trading at 9.1 times next year's earnings, falling to 8.4, and "do not look particularly expensive". 'Buy', the paper still recommends.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.