Friday tips round-up: Rexam, Flybe, Cupid

6th May 2011 06:36

Rexam, maker of cans and plastic packaging for anyone from Coca-Cola and Heineken to US consumer products manufacturers such as Procter & Gamble, wants to achieve a return on capital employed of between 12% and 15% over the next three years. For 2010, the figure achieved was 12.3%. Rexam shares are on about 11 times this year's earnings and should have further to go in the long term, says the Times.The budget airline Flybe made its market debut at 295p in December, but its shares nosedived well below 200p yesterday after a dire trading update that contained two profit downgrades. While potential investors may take comfort in Flybe's modest forward earnings ratio of 7.6 and its objective to expand across continental Europe, its reliance on the still fragile UK economy makes us think that this calamitous flotation remains fraught with risk, and may suffer further turbulence in the months ahead. Sell, says the Independent.Cupid, formerly known as Easydate, listed on Aim in June and provides online dating services. The company is based in Edinburgh but most of its staff are in the Ukraine. Recent results were very impressive, with Ebitda up more than 350 per cent to £5.6m. Buy, says the Scotsman.Vedanta shares, floated at 290p in 2004, closed last night at £21.24½. There are several reasons to stay away, aside from the company's interminable war with environmental protestors over a mine in India and the uncertainty over Cairn. Much of the assets are locked into minority holdings in subsidiaries, which makes accounting tricky; almost 62% of the equity is locked away with the chairman, Anil Agarwal. Best avoided, says the Times.Despite the pullback - which we would attribute to jitters about the political situation in Ivory Coast, where gold miner Randgold operates - we continue to believe that the stock will trade higher in due course, says the Independent. The valuation, which, at 1.6 times net asset values, according to Numis, is hardly prohibitive. At spot gold prices, that multiple falls to 1.1 times, according to Canaccord Genuity, says the newspaper, which recommends buying the shares.The engineering and construction company Costain looks like it's in pretty solid shape despite recent market turmoil, with yesterday's update showing that it had secured £850m in revenues for 2011. Moreover, the group has more than £100m in cash on the balance sheet and no significant borrowings to speak of. In other words, the picture looks rather rosy. That, coupled with an affordable forward-earnings multiple of under 9 times, makes this a stock worth buying, in our view. Buy, says the Independent.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.