Sunday tips round-up: Smith & Nephew, Chesnara, Coal of Africa

4th Oct 2009 11:31

Among US health care proposals under consideration is a possible $4bn (£2.5bn) annual tax on companies that produce medical products. This could dock around 11% off earnings at Smith & Nephew, which makes artificial hips and knees and does some 45% of its business in the US.The case for buying Smith & Nephew lies in the demographic argument that people are getting older and will need more hips and knees replaced. The company also has around 15% exposure to emerging markets where it can expect to see some growth, but on 13.5 times next year's earnings, with a yield of 2.1% it is one to avoid says the Sunday Telegraph.Brokers forecast a dividend from closed end life group Chesnara of 16.2p for 2009, rising to 16.7p the following year. The shares are 170p, so they are yielding nearly 10%, which is particularly attractive when savings rates are so abysmally low.Chesnara is conservatively managed and has benefited from the stock market's strong run over the past three months. There has also been a raft of takeover activity in the life insurance sector and Chesnara is a classic bid target for a larger player. Buy says the Mail on Sunday.Coal of Africa is a coal mining company operating principally from South Africa. Its first coking coal mine will be given a licence to operate within weeks and its second should be licensed next year. The firm is still loss-making, in common with many early-stage miners, but it should move into profit in 2010 and earnings are expected to surge from 2011. The share price has risen risen by 56% over the past five months. Those who bought on a recommendation in May should sell a third of their holdings but keep the rest as this business should continue to deliver. New investors may even consider buying a few shares at current levels the Mail on Sunday suggests.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.