Thursday tips round-up: Hargreaves Lansdown, Tesco, Smiths News

18th Apr 2013 08:37

Hargreaves Lansdown stands to benefit from the Retail Distribution Review which came into effect this year. As well, the company's business model is structured in such a manner that it gains more through management charges as its clients do so. Further, it is more of a retail supermarket than a fund manager, with whom it is most often lumped together. Not surprising then - perhaps - that its assets under management are expected to have soared by a record 4.7bn pounds in the first three months of the year. The shares are trading on a high multiple but are not easy to value. Even so, the outfit does promise to pay out the majority of net profits in dividends, a useful income. "One for the long-term," says The Times's Tempus column. British groceries have been having a hard time of it since the Boston Tea Party. Hence, it is little wonder that Tesco's US adventure went wrong. The company's real problem however is that, at least last year, it did not do much better in any of its other foreign markets. Not only that, while the company announced that it will reduce its capital expenditures - meaning that more will be left over for shareholders - its target for returns on capital are not particularly ambitious. At 12 times earnings that lower growth profile looks expensive, says the FT's Lex column. Mid-year figures for Smiths News revealed a company which is making progress across all its divisions and is on target for one of its main strategic goals. That is reducing the share of its staid newspapers and magazine wholesaling unit's contribution to profits to half by 2016, from 73% at present. The stock now sells on a more reasonable multiple of nine times' earnings. Interesting, but further progress may be limited, Tempus writes.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.Ab