Sunday share tips: Wood Group, Asos, Kentz Corporation

16th Dec 2012 23:03

Shares of Wood Group have moved off a six-year high seen earlier this year as it looks like there could be some softening of growth next year. While the yield per share on the company´s stock is just 1.8 per cent (such that income seekers should look elsewhere), analysts still expect earnings per share (EPS) to grow by 19 per cent in 2013 compared with expectations of 37 per cent EPS growth in 2012. As well, in last week's trading update Wood warned that its Canadian oil sands business was likely to see a slowdown, with profits at its power business also expected to be lower next year. It is true that growth in exploration and production spend by oil companies will be about 7% next year. That marks a slow-down on 2012, but there should be plenty of opportunities for the company. As well, the company´s expertise lies in what are still growth areas, such as operating in extreme environments, such as Arctic engineering. Thus, the medium-term structural drivers of the business are intact. The shares are trading on a 2013 earnings multiple of 11.8, which does not look overstretched. Wood's portfolio also looks well-positioned and it should continue to outperform the sector and have resilience when markets are weak. The Sunday Telegraph´s Questor team rates the shares a buy for its long-term growth prospects.Tis the season to panic. The nine days left before Christmas will make the year for some retailers. For others, it will be the final nail in their coffins. There are few "safe" bets in the sector, but Asos seems better than most. Last week the online fashion website revealed that domestic sales had risen 24%, smacking down sceptics who doubted it could maintain its soaring growth in these austere times. For others, it is a nervous time. IHS Global Insight, the research firm, said: "A serious battle of wills may well develop over the coming days between many consumers holding off from doing their Christmas shopping until the last moment in the hope that increasingly worried retailers will offer more discounts and promotions, and retailers holding firm on prices in the belief that consumers will increasingly buckle and buy as Christmas gets nearer." Asos has the wind at its back. It is growing like topsy, and is very fully valued ? roughly 49 times next year's projected earnings. The biggest risk for investors is that even the slightest mis-step could knock it off its perch, The Sunday Times´s Danny Fortson writes. Engineering and construction group Kentz Corporation is firing on all cylinders and last month said it would grow by at least 10% in 2013. Yet the company's shares have fallen 20%, tarnished by association with less fortunate peers, such as Lamprell and Cape, which have issued a succession of profit warnings. This is unfair, says the Financial Mail on Sunday´s Midas column.Kentz has a different business model, it is performing well and new Chief Executive Christian Brown has ambitious plans. Unlike many of its peers, it focuses on the nitty-gritty of construction - building oil refineries, gas liquefying facilities and metal processing plants around the world. That is exactly one of the skill sets which large oil and gas firms most value. Kentz has nearly £60m of cash on its balance sheet and Brown intends to use it to buy a business that will improve the group's technical engineering expertise. The firm already has an engineering arm but it is more frequently used to build and maintain projects than design them from scratch. Brown would like to offer a complete package to more of its customers - a move that would also boost profit margins. Some of the larger oil, gas and mining projects are being cut back in light of economic conditions, but Kentz tends to work at the slightly smaller end of the market where business continues to be brisk. "The shares, at 393 3/4p, are cheap. Buy," says Midas.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.AB