Thursday tips round-up: Burberry, Hays

12th Jul 2012 07:00

The Questor team in The Telegraph has recommended to hold luxury brand group Burberry, after the firm's latest slowdown in sales growth hit the shares hard yesterday.The paper says that to justify its rating - shares are trading at 16.9 times current-year earnings - Burberry must continue to grow which will be a challenge with strong prior-year comparisons. The column says that China is key to this growth and the amount of new floor space there should keep sales rising for some time."Questor thinks the shares, which yield 2.4%, are still a hold and not a buy, because of near-term headwinds, though the evolving business model bodes well for continued long-term growth."The Tempus column in The Times has taken a look at recruitment firm Hays, which surprised many yesterday in a fourth-quarter trading statement by revealing that net fees, and therefore activity from the UK public sector, are ticking up again after three years of decline. However, the paper warns that this isn't an early sign of some sort of public-sector jobs boom.This tick-up was only modest compared to the decline over the last few years and the group still saw a steady decline in the rate of growth in work won at all three geographical divisions across the second half. "As a result, across the group a growth rate of 10% in the third quarter declined to 2% in the fourth and, as the company exited its financial year, growth was non-existent," Tempus said.While the group was prompted to rebase its dividend, the paper says that it has controlled costs well and is in line to grow full-year operating profits by 12% in 2011-12. However, with the shares trading at 13 times earnings, Tempus says the stock "seems to build in a faster recovery that most expect".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.BC