Friday tips round-up: Intermediate Capital, Hays, Victrex...

7th Oct 2011 06:56

Even if all the analysts in all the world think your shares are a raging buy, it may not help much in these markets, says the Tempus column in the Times. Intermediate Capital Group (ICG) shares, before yesterday's 16p bounce to 214p, had lost 41 per cent of their value since August 7. Therefore, according to which analyst you believe, the shares are "undervalued", the fall "looks overdone", or they are "staggeringly cheap". ICG was one of my tips for 2011 so, unsurprisingly, I am inclined to agree. They sell on about 7.5 times this year's earnings. House broker Royal Bank of Scotland has cut its forecast for dividends this year because the turbulent markets mean disposals and realisations on investments will henceforth be subdued, but even on a flat outturn and a total of 18p again, the shares still yield 8.4 per cent. Sometimes the market can take a long time coming round to the right point of view, says the paper.Yield is a rare commodity in today's economic climate and even 5 per cent seems impossibly rich. But Hays offers a prospective 9 per cent, according to the Investment Column in the Independent. Of course, unusually high yields are often matched by high risks, and this is very much the case with Hays. Britain's biggest recruiter has been under a cloud as far as its share price is concerned because of the potential impact of the prevailing economic turmoil on its prospects. The fear is that companies will stop hiring and employees will sit tight and stop moving. That is already the case in Britain. On the upside, Hays' overseas operations account for 68 per cent of the business. And, despite pressures closer to home, Hays does have opportunities in the UK, where 80 per cent of vacancies are filled by recruiters. The US and the Netherlands boast similarly high rates. Still, even if the divvy does face a cut next time round, Hays shares look cheap at just 8.5 times September 2012 earnings. Hays is a risky bet, but could just be worth a punt in light of the valuation. Buy, recommends the Independent.Victrex is, to quote from a note from Numis Securities, "easily the world's leading producer of polyaryletherketone products", and, indeed, it is a claim that few would be inclined to dispute, says the Tempus column in the Times. The substance we shall henceforth refer to as PEEK is a high performance polymer with resistance to chemicals, wear and extreme temperatures, and it is increasingly used as a lighter replacement for metals. Victrex delivers around the world in days, but when customers stop needing PEEK, demand falls off rapidly. The shares are on almost 13 times this year's earnings, a high rating in these markets, and given the uncertainty over earnings visibility, do not seem to have anywhere to go in the short term. Hold, says the Times.XP Power, the London-listed, Singapore-based manufacturer of power control components for the electronics industry, disappointed shareholders with its latest interim management statement yesterday, says the Investment Column in the Independent. Not that there is anything new in this, as shares in XP Power have fallen by about a half in the past seven months against a backdrop of growing concerns about the challenges faced by the global economy. XP Power continued to put a brave face on things yesterday, arguing that the low interest rates that have resulted from tough economic conditions in the West should increase demand for the equipment made by its customers. However, the company conceded that demand for its products would be hit by what it described as "the increasing negativity of global end-market growth forecasts". Although the company's share price has taken a hammering in recent months, the shares are still trading at levels well above their historical average, and the likely slump in the global economy suggests they may have further to fall. We'd keep away, recommends the paper.BCPlease 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.