Friday tips round-up: M&B, LSE, M&C Saatchi

25th Sep 2009 06:40

Yesterday's full-year trading update, pointing to earnings slightly above market forecasts, had all the characteristics that investors have come to expect from Mitchells & Butlers: a rock-solid operational performance underpinned by a tight grip on costs, resulting in resilient margins and strong cashflows.The pressure on consumer spending from rising unemployment and January's proposed VAT change instills caution. But at 274.6p, down 9.6p, or a multiple of 12 times next year's earnings, hold on says the Times.Before popping the champagne corks, the Independent adds it's worth remembering that M&B is not without risk. The outlook for consumer spending is still "uncertain". Total borrowings at the year-end will be nearly £2.64bn. The shares have also nearly doubled since the autumn of last year. Still, prospects are looking good, so hold.Shares for advertising companies might look like the last place you want to go. But M&C Saatchi's price-to-earnings ratio of eight times 2009 does not look demanding, and the company is well placed to come out smelling like roses when the recovery finally begins. Hold your nose against some of the awful ads and take a punt. Buy says the Independent.Two months ago Songbird, which owns the majority of the company running London's Canary Wharf, was in trouble and all set to breach banking covenant tests scheduled for November. An enormous emergency cash call later, the group is now debt-free and is out of the woods as far as administration is concerned. Hold the shares for now and be prepared to buy on news of further improvement.In terms of trading, things look pretty grim for LSE. The value traded across the LSE's various platforms in the five months to August was down by 43% at £4.6bn, compared with the same period last year. This is largely due to tough comparatives. Volumes were sky-high last year on turbulence, and the market was higher so values are naturally down.Yielding 3%, LSE shares trade on 14.5 times earnings, cheaper than the global exchanges that trade on 18-19 times. The downside is limited because, if LSE fails to deliver, it will fast become an acquisition target. Buy says the Telegraph.BAE Systems has bought out VT Group's 45% stake in their joint shipbuilding venture BVT for £346m, completing a takeover process which really began in 2007 when the partnership was first formed. AE shares are still trading on a 2009 earnings multiple of 8.4 times, far below their typical rating, and offer a dividend yield of 4.4pc. BAE is forecast to report a 25% rise in revenue this year. Unless you think the world is going to become a significantly more peaceful place in the coming years, the defence sector deserves a positive stance. Buy says the Telegraph.Yesterday's first-half results showed S&U, the West Midlands stalwart doorstep lender, putting in a solid, if unspectacular, performance: pre-tax profits and earnings per share up 8%, strong operating cashflow and net borrowings down 13%. At 472½p, up 32½p, or less than nine times current-year earnings, and yielding 6.8 per cent, the shares are worth buying for the dividend alone, suggests the Times.Group NBT, formerly NetBenefit, is one of the great dot-com survivors. Its biggest business is managing corporate domain names ? acquiring, registering and renewing company web addresses and protecting against their misuse. At yesterday's 282p, or 13 times earnings, the prospect of further double-digit growth and a growing cash pile gives cause to hold on 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.