Thursday tips round-up: GKN, Drax, Xchanging

17th Dec 2009 06:10

GKN yesterday delivered its first upgrade to profit forecasts this year ? but you might not guess it from the shares in the aerospace and automotive engineer, which actually fell on the day. At 113½p, or eight times the best guess of 2011 earnings, the shares trade at a steep discount to US peers. Buy, says the Times.Drax shares were recommended at 410.4p on November 31 and the shares have edged 3pc ahead. In the two weeks since the shares were first recommended as a buy, earnings forecasts have been increased. The Telegraph's Questor advised buying the shares for the yield, which stands at 7.6pc next year and the shares remain a buy for that reason. The December 2010 earnings multiple is 6.7pc. The big risk - and what analysts are currently fretting over - is the glut of gas in the UK making coal-fired electricity generation less attractive. However, with a significant amount of capacity hedged into 2011, the stance remains buy.Xchanging's shares are down on the year, while the market is up, and they have been idle over the last six months. The cost cutting will be welcomed by investors, but elsewhere there appears to be little momentum. Governments are mad keen on outsourcing, but corporates appear less so (for now). As a result the Independent says sell. There are better opportunities elsewhere.Petrofac shares were recommended at 468p on March 10 and the shares are up 109pc compared with a market up 43pc. Petrofac has a great business and it is run exceptionally well, however the valuation appears to be up with events for now and the shares are unlikely to surge ahead in 2010 like they did in 2009. The Telegraph's Questor put a hold stance on the shares on October 23 when they were at £10.30 and, for now, the rating stays the same.Polar Capital Technology Trust has been heading north. The mid-cap investment trust has gained nearly 40 per cent since January, the sort of performance that saw it named technology fund manager of the year in the 2009 techMARK awards. For UK investors, Polar is one of the few ways to play global technology markets through an investment trust, providing exposure to both the behemoths (Apple, Google and Microsoft are its biggest holdings) and likely next-generation winners. On the basis of Polar's track record, the shares, at 238p, or a 13 per cent discount to NAV, should be tucked away, says the Times.Investors in Infoserve, the online local search specialist, have had a rough year. The economy is still fragile, and advertising revenues, whatever the split between online and offline, may come under renewed pressure in the event of a double dip. Nonetheless, the Independent is willing to take a gamble. Speculative buy.Silence Therapeutics has broken the hush. More than two months after the AIM-listed biotech company asked for its shares to be suspended, Silence resumed trading yesterday with an £18 million all-paper merger with Intradigm, of California, and a £15 million share issue. However, at 19¾p, down 5p, await further progress on licensing deals before buying in, writes the Times.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.