Thursday tips round-up: Hill&Smith, 3i

15th May 2014 09:55

Steel manufacturing group Hill&Smith will take a hit from the strength in the pound, management told investors on Wednesday. As well, its utilities division, which makes specialised pipes for water infrastructure projects, experienced project delays. Indeed, the company's fortunes are closely linked to work in the public sector. However, some of those projects have now started. Furthermore, its galvanised steel operations, its largest unit, have seen volumes rise by 7 per cent in comparison with the same stage of last year, although margins in the US are lower. The company has grown its dividend by about 50 per cent over the last five years and its shares, trading on 14 times' earnings, falling to 12, look reasonable value. The Daily Telegraph's Questor team says. Investors reacted well, and with reason, to 3i Group's latest set of annual results. By means of an almost three quarters reduction in the workforce Chief Executive Simon Borrows, who took over exactly two years ago, has managed to rein in costs which were wildly out of control. Previously the company had been forced to carry out asset sales simply to keep things going, instead of funnelling the proceeds back to investors. Thus, costs are now running below the firm's fee income. As a result the outfit promises to top up the basic dividend of 8.1p with funds from disposals for a total of 20p. As well, the venture capital group surprised with a larger than expected revaluation of its investment portfolio, although the majority of that came from its majority stake in Action - the fast growing European retailer. "The shares look like a solid "hold" for that income and potential capital uplift," writes The Times' Tempus.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.