Thursday tips round-up: Compass, Chesnara, Topps Tiles

1st Apr 2010 06:56

It is caterer Compass's push into running more than just canteens for its customers that could provide the next leg-up. It wants to handle other support services, too, such as cleaning, laundry and reception services, and with annual cash generation of £500 million and net debt of less that £1bn, it has plenty of headroom to make regular bolt-on acquisitions to further that aim, such as February's $50m (£33m) purchase of Canada's Hurley. At 526p, or 16 times earnings, hold says the Times.Britain's love of bacon sandwiches and bangers is in no danger of waning. However, consumers are getting more discerning and premium sausages, such as those made by Cranswick, are proving incredibly popular. The shares are trading on a March 2010 earnings multiple of 12.3 times, falling to 11.3 in 2011. This does not seem too stretched for a company that continues to show good growth. Buy says the Telegraph.News that large-cap miners had forged an iron ore agreement with Japanese steel mills to increase prices by 90% is good for BHP Billiton and Rio Tinto. It is also good for Russian gold producer Petropavlovsk. The group, which used to be known as Peter Hambro Mining, also has an important iron ore project, which some analysts believe could be worth £5 a share. Petropavlovsk's iron ore operations are in Russia - not far from the border with China. Once a bridge is completed across the Amur River, it can be delivered to Chinese steel mills by train very cheaply. Even without the bridge, transport costs will be a fraction of the major suppliers'. The current-year earnings multiple is 11.5 compared with 39 for Randgold. With the iron ore operations appearing to have a minimal valuation in the current rating, the shares remain a buy. However, they are likely to remain volatile says the Telegraph.Chesnara's purchase of Moderna, of Sweden, looks to have been its best deal to date. The question from here is whether Chesnara can generate cash in Sweden, which requires further investment, and find new books of business to buy. Shareholders are unlikely to see a repeat of recent strong capital gains: the shares are up by 77% on the year. But as a payer of high and rising dividends ? at 234¾p, Chesnara still provides a yield of 6.8 % ? its attraction is undiminished. Hold says the Times.Valiant Petroleum is an AIM-listed oil and gas explorer operating in the inhospitable northern North Sea, whose shares are strongly geared to success at a handful of hitherto-overlooked fields. The sinking of the first well in Valiant's smaller Tybalt field next month should keep the stock market's attention. So, too, should the recent commitment of Total, the French company, to develop fields to the west of Shetland ? close to Handcross, one of Valiant's targets for 2011. At 610p, up 35p, buy on weakness says the Times.Topps Tiles, which trade on 2010 price to earnings ratio of 10.2 times, represent a discount to the sector and may tempt some brave investors. But given the fragile recovery in the housing market, continued hibernation of consumers and a sense of foreboding among consumers over what the next government may do to reduce the public sector deficit, investors should wait 12 months before some investment DIY in Topps. Hold says the Independent.Carluccio's has been doing well. Yesterday's update from the Italian restaurant chain revealed that, despite some harsh weather at the beginning of the year, trading across the network has continued to perform ahead of expectations. The Independent says though it might be better err on the side of caution. The problem isn't Carluccio's, but the harried British consumer. And this doesn't bode well for sentiment. Hold for now the paper says.Entertainment One, the company that has distribution rights to the films in the UK and Canada is Entertainment One, and yesterday it put out an update saying trading would be at the top end of the expectations it only recently upgraded. The group lifted UK box office revenues sevenfold during the year to £53.1m, dominated by The Twilight Saga: New Moon, which generated £29m. The outlook for the group is also good, with the third Twilight offering scheduled for release in June and other films currently in cinemas. Films have proved resilient in the economic downturn. This company looks a decent bet to carry on growing. Buy 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.