Friday tips round-up: Kier, Investec, Cobham...

16th Sep 2011 06:47

Kier, the construction, house-building and contracting firm, has, to its credit, managed to come through the slump rather well, drawing strength from the diversity of its operations and sound strategic moves, according to the Investment Column in the Independent. This was reflected in its results yesterday, when it revealed that underlying pre-tax profits had climbed to nearly £70m in the year to the end of June, up from £55.5m in 2010. The full year dividend was up by 10 per cent, while construction margins improved and services margins remained stable. The valuation - the stock trades on under 8 times forward earnings - is also supportive. These factors argue against selling. The gloomy mood in the markets, however, argues against buying at this point. Hold, says the Independent.Any decision to pay £233 million for a City broking and fund management business, in today's climate, looks like a brave one, says the Tempus column in the Times. Investec's purchase price of Evolution Securities is reduced to £160 million by the amount of cash Evo has in the bank. The appeal of Evo is the £7 billion of private client wealth it has under management at Williams de Broë, which would bring Investec's UK total to £22 billion, acquired at a price comparable to recent such deals. The shares are on about ten times' this year's earnings; some analysts believe the market is undervaluing the wealth management side, but it may take the rest of the market a while to come around to this point of view, says the Times.Cobham, the aerospace and defence group, is an innovative company working in a difficult market, according to the Investment Column in the Independent. Best known for its heavy aviation engineering, the company produces pipes and other devices for the oil tankers used to refuel the RAF aircraft flying to Libya and the bomb racks used in Boeing's F15E jets. Yesterday, it agreed to buy California's Trivec-Avant Corporation, a maker of satellite antennas for transport and logistics companies, for $126m (£80m), with an additional payment of up to $18m if it performs really well. It also announced a new $60m contract to supply an aerial refuelling pod for the KC-390 tanker aircraft being developed by Brazil's Embraer. Overall, Cobham appears to be doing everything right and its first-half results were encouraging. The trouble, however, is that about 70 per cent of its sales come from military customers at a time when many countries, including Britain and the US, are significantly cutting budgets as part of severe austerity programmes. Hold, says the Independent.If you are looking to buy a recruitment magazine for the recruitment industry, a recursive idea, I appreciate, I might be able to get you a good price, says the Tempus column in the Times. This is the only non-core asset not yet sold by Centaur Media, the owner of trade titles such as The Lawyer, Design Weekand Money Marketing. When the trade press went into the downturn, there was a belief that it would be reasonably robust. Not true; the titles are reliant on advertising revenue, in particular for jobs. Centaur this summer completed a restructuring that involved the sale of those non-core titles, reorganisation into three divisions and the loss of about 10 per cent of the workforce. The market capitalisation is now significantly less than a year's revenues, which makes the shares look cheap. But I would not buy yet, says the Times.We've been buyers of Booker since November last year, when the shares were worth around 53p, according to the Investment Column in the Independent. The investment in the cash-and-carry wholesaler has, we are pleased to say, worked out well. So, is it time to bank profits? Firstly, yesterday's results showed that the business remains strong, with total sales in the twelve weeks to 9 September rising by "7.6 per cent on the same period last year". Total sales in the 24 weeks to 9 September were up by 8.5 per cent. The strong trading performance, and the international expansion, makes us think that the stock offers scope for upside gains. No need to sell, according to the Independent, which keeps its buy rating.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.