Sunday share tips round-up: Entertainment One, Eros, Reed

2nd Oct 2011 17:04

"When markets fall the buying opportunities arise not just for investors, but also rival firms looking for acquisitions. (...) It is not yet clear whether Entertainment One will become the target of a successful bid. But that need not matter to investors who followed our tip. The approaches for the company are the best possible support for the argument that it had been undervalued. (...) Those who want to take a profit now should do so. We often say there is nothing to be ashamed of in banking a decent profit and in this case it would be a very respectable 18 per cent in just over three months. However, the long-term prospects for this share look solid. If no bid emerges, the shares will drift, but takeover approaches show there are buyers out there that see the value in this company. Take a long-term view and hold. And if the shares drop back towards that 161p level, those who don't already own the shares should think about buying," says The Financial Mail on Sunday´s Midas column. The Questor team at The Sunday Telegraph writes this weekend that, "Questor would never claim to be an expert on Bollywood movies - but the continued success of Indian film cannot be underestimated. One company at the centre of the industry is Aim-listed Eros International - and it has ambitious plans to lead the globalisation of Indian film entertainment." Likewise, adds Questor, just the global audience of South Asians is huge. Despite the above and what at least Questor sees as other strengths, such as the fact that the company receives a share of all cinema tickets sold, the shares however are trading at a very low forward earnings multiple of 6.7, falling to 6 next year. Admittedly, one reason for that is the company´s low 'free float'. Nonetheless, said issue is understood by management and the company ought to trade like a growth stock. For Questor the shares are a new buy, as growth in its sector looks set to continue for some time. Reed Elsevier last week announced the £343m acquisition of Accuity. The firm's shares have declined 9% since the beginning of the year and the company is resisting pressure for a break-up. RBS puts Reed´s shares at a 30% discount to break-up value - trading on 10 times next year's forecast earnings. Reed could spin off its Lexis Nexis arm or even split off Elsevier, either could boost its stock, reports The Sunday Times.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.