Friday tips round-up: Rio Tinto, Randgold Resources, Schroders

6th Aug 2010 06:38

Rio Tinto's must rate as one of the most spectacular debt-reduction strategies of modern times and leaves the miner with gearing of 20%.The restructuring should give investors renewed confidence in Rio's balance sheet but, more importantly, it will enable the miner to fund future growth projects. There could be big peaks and troughs, but Rio's balance sheet management will reassure investors that if they keep the faith, they will be rewarded says the Times.Trading on a hefty 22 times next year's earnings, the African gold miner Randgold Resources has always suffered from investors believing that it is too expensive. Investors should not forget that the group is a proxy for the gold price and with the global economic outlook looking weak at best, gold will continue to be a commodity in high demand. If investors have yet to cotton on to the Randgold story, now is not a bad time to start. Buy says the Independent.Investment flows can be lumpy and hard to predict, but at this rate fund manager Schroders looks on course for adjusted full-year earnings of 92p or more. The 3.5% rise in the shares yesterday to £13.85 puts it on a prospective p/e multiple of 15 times and a yield of perhaps 2.5%. With £900m of cash on the balance sheet, Schroders is less of leveraged bet on share markets than its peers. Hold says the Times.Bookmaker Ladbrokes has resumed paying dividends, with an interim payment of 3.85p. Cost cuts helped Ladbrokes to an overall 5.1% rise in operating profits to £103.6m, excluding high rollers, which was ahead of expectations. Trading on 10 times 2011 forecast earnings, Ladbrokes looks more or less fairly priced, particularly given the uncertainty over how cutbacks will impact on the consumer's willingness to spend. So hold says the Independent.Spirent is one of the more obscure beneficiaries of our increasing love of smartphones and computers. The company, which performs network tests and performance analysis for telecoms companies, is riding the wave of increased data usage that has put pressure on the networks to ensure they are working properly. Network contracts for LTE, the industry acronym for 4G, will only grow as more telecoms companies gear up for the next big upgrade and Spirent looks well positioned to benefit. For the shares, though, further upside looks limited as they already trade at nearly 20 times 2010 forecasts. Hold says the Times.BBA Aviation, which provides aircraft services such as engine repairs and maintenance, trades on an undemanding multiple of less than 11 times forward earnings for 2011. Improving trading conditions and industry data that points to even better times ahead suggests that is reasonable. Hold says the Independent.Weir makes industrial pumps and valves for minerals processing, oil & gas, power and general industry. It manufactures the equipment and provides spares and maintenance services. The company also has ambitious plans for growth. It aims to double pre-tax profit by 2014 and this week's numbers appear to have confirmed that this is a realistic, although ambitious, goal. The shares are trading on a December 2012 earnings multiple of 13.1 times, falling to 12.1 next year. Buy says the Telegraph.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.