Friday tips round-up: Kingfisher, Colt Telecom, Capita

24th Jul 2009 06:44

Kingfisher issued its second-quarter trading update yesterday, topping most analysts' expectations. With the Office for National Statistics also saying yesterday that retail sales rose in June, the group should be feeling confident about the rest of the year.Kingfisher probably deserves a small premium and, while some may want to wait for a bit of softening, the Independent reckons Kingfisher shares are worth buying, even at this level. Buy.China remains a drag on Kingfisher but the full effect of rationalisation has yet to feed through and start-up losses from Castorama in Russia continue to fall. At 209½p, or 16 times earnings, the shares are at a two-year high ? but recovery has further to run. Buy on weakness adds the Times.After February's €201m fundraising, Colt Telecom's balance sheet has never been in better shape, boasting net cash of €243m. That strength and rising cashflow explain why it is contemplating acquisitions for the first time in its 17-year history. But at 119½p, or nine times next year's earnings on broker estimates, the shares are no longer cheap ? and, unlike those of BT, do not come with a dividend. Pass says the Times.Capita's management cannot think of any substantial risks facing the outsourcing company, stressing that it benefits in a downturn by telling the private sector and the government that it can save them money. Target revenues for 2010 are already 90% booked. Capita should still be a core bet. Buy says the Independent.Analysts also expect to see long-term earnings per share growth of around 10% a year from Capita. The shares are trading on a December 2009 earnings multiple of 18, which does seem high, but the dividend is well covered and the company now looks likely to easily meet full-year forecasts. Shares in Capita remain a buy adds the Telegraph. Catering group Compass issued an update yesterday that was entirely in line with expectations, but the shares edged lower on concerns about easing organic sales growth. This slowdown is hardly surprising and the stance on the shares remains buy says the Telegraph.Scottish & Southern's very impressive 6.3% dividend looks secure. The shares are trading on a March 2010 earnings multiple of 10.2 and are a buy for investors focusing on income says the Telegraph.Sub-prime lender International Personal Finance's comment that the woes of the first three months of the year were behind it and that trading was in line with this time last year sent the shares up 47%. The economic outlook in the markets in which IPF operates is still uncertain. In Hungary, for example, the group is having to take some radical action to offset some pretty dire macro-economic conditions. Hold for now, but not for too much longer says the Independent.Strong cash generation means that Imperial Tobacco's gearing should steadily fall. the shares are vulnerable to a shift out of safe-haven stocks to cyclical alternatives. But at £16.60, or ten times current-year earnings ?against its sector's 12 times ? and yielding a solid 4.3%, they should be tucked away for the long term says the Times. 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.