Sunday share tips: Aviva, Cineworld, Energetix

8th Jul 2012 18:04

The market appeared a little underwhelmed by Aviva's new strategy, with shares rising 1.1 per cent after they were unveiled on Thursday. However, the plan put together by chairman John McFarlane looks sensible. The strategy seeks to improve profitability, capital discipline and cash generation so the company can return to growth. Indeed, an analysis by RBC has revealed that just 14 per cent of the group's assets are actually performing in terms of capital employed. Of great importance, Mr McFarlane said they were "trying" to save the dividend. Questor reads this as meaning there is a chance that it will be trimmed in the next couple of years, depending on how well the disposal plan goes. We still don't know for sure. Another major concern is the fact that the company is still without a chief executive. With Mr McFarlane already putting the turnaround plan together and getting the process under way, the best candidates for chief executive may be put off. There is no doubt that the shares are cheap, trading on a current year-earnings multiple of 5.7, falling to 5.2 next year, compared with RSA Insurance on a 2012 multiple of 8.2 falling to 7.7. Whether we have reached an inflection point for embattled investors remains to be seen. Questor is cautious and now rates the shares a hold because of the execution risk.As expected, the first half of the year was tough for cinema operator Cineworld, but Questor expects the year to have a happy ending. Despite a likely hit from the London Olympics, the film release schedule for the second half is strong. Cineworld will present a new Batman, a James Bond, a Bourne thriller and the latest Spiderman, among others. These seem like certain blockbusters. Last week's trading statement showed that, although attendances had fallen, total revenues were up by 1.1% after price rises were introduced. This caused a 4.1% increase in box office sales, which made up for a 2.1% fall in retail sales and an 18.7% fall in "other income". The 18.7% fall in other income seems steep, but it was expected. Most of the fall was down to the removal of online booking fee, which was a sensible strategic move. As well, yielding 5.75% the shares remain a buy for both income and growth, The Sunday Telegraph´s Questor team says.Energetix, a small company quoted on the Alternative Investment Market, intends to offer a new boiler for free plus cheap gas and electricity. Every year, 1.5m new boilers are installed in Britain, each costing an average of about £2,000. Most of these are emergency purchases and are a burden on cash-strapped homeowners. Energetix will offer customers free boilers provided they sign up for five years' dual-fuel supply of gas and electricity, which are guaranteed to be cheaper than supplies from the top six main providers - British Gas, EDF, Eon, Npower, ScottishPower and SSE. The deal is made possible because Energetix has designed a boiler that generates electricity whenever it is used for central heating or hot water. For the average home, this means about half its annual electricity will be generated, effectively for free. Energetix shares are 23p. Brokers believe they are worth at least double that figure. The company has an exceptionally strong management team and massive potential for growth but it is not yet profitable, so investors have steered clear. Buy, says The Financial Mail on Sunday´s Midas column. ABPlease 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.