Thursday newspaper tips: BAE, Speedy Hire, Rockhopper

13th Oct 2011 06:34

Since exiting the passenger jets market some years ago, BAE has been an entirely defence-focused business. Today, about half the workload comes from the UK military and about a fifth from the UK defence establishment. This is not a good place to be; last month the company announced about 3,000 job losses in its Typhoon programme. With defence cuts set to continue and earnings likely to be flat over the next couple of years, the shares could still have further to fall, the Times says.Speedy Hire, the tools and equipment for hire business, said underlying revenues in its second quarter were expected to be up by 4.1% on the year, helping put the business on track to meet the board's expectations for the full year. It is cheap, trading on around 10 times forward earnings for next year, falling to under eight times on the estimates for the year after. Hold, the Independent says.Rockhopper Exploration, the Falklands oil explorer's shares have nearly halved since February, in part the usual gyrations that oil explorers are prone to, and in part worries over how the company will fund the $2bn its Sea Lion field will cost to develop. At today's price, up 20¾p to 211p, investors might as well stay in. But it is still going to be a long and interesting road to the first oil being produced in 2015 or 2016, the Times says.Datatec, a distributor of IT products and provider of IT services, has tended to look towards the developing world for growth, unusually for a company in this line of business. Areas such as Brazil, Latin America as a whole, Indonesia and Turkey offer double-digit annual growth rates, as opposed to the more pedestrian 4 to 6% available in more developed territories, the main market for other companies in the sector. The shares are on a little more than ten times earnings; not easy to get hold of in London, but an interesting play on global economic growth, says the Times.To look at the way the economy has been going it might come as something of a surprise that builders' merchant and DIY retailer Travis Perkins has managed to book a 5.9% rise in like-for-like turnover for the nine months to the end of September. The valuation of just 9.3 times full-year forecast earnings is undemanding. And it is true that Travis Perkins has been doing remarkably well; it could continue to gain market share, but it will have to work hard to maintain momentum given the pressures on its market. We would also note that it is not as if there is the compensation of a chunky yield, which stands at a prospective 2.5% for this year, rising to 3% next year. Avoid, says the Independent.RWS Holdings occupies a unique niche, acting as a kind of language lawyer, searching for and translating patents so that companies get to protect their products across a range of territories. Clearly, a global downturn can't be good for a company dependent upon innovation for a living. Still, businesses are putting increasing store on developing and protecting new technologies and not every country is struggling. We decided to buy in when the stock was worth around 400p. It has done well since and may well continue rising. But the risks posed by the economic backdrop mean that we are happy to sit on our holdings for now, says the Independent.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.