Thursday tips round-up: John Wood, RPC, Astra Zeneca

6th Jun 2013 10:24

The oil exploration sector has been battered by profit warnings and a perceived lack of orders in some territories, but John Wood Group is strong in deepwater engineering and in developed economies, while contracts tend to be on a less risky re-imbursable basis. In brief, that is the jist of a recent research note put out by the team at Numis Securities, which says that in their opinion the stock has been unfairly overlooked, writes The Times´s Tempus.There are some glimmers of hope that an impending recovery in the Eurozone may be nearing. So although at the moment the evidence may not be enough to hang your hat on the fact is a that a company such as RPC, which derives two-thirds of its top-line from that area, stands to profit from any eventual recovery. The shares have been erratic following a profit warning, as the company was hit by the lagged impact of higher oil prices on those of polymers for its plastic containers, foreign exchange movements and general energy and wage inflation. Nevertheless, the firm has offset much of these through cost savings. Furthermore, there is potential for a Eurozone recovery, which would bring a resumption of orders for new product ranges. RPC's exposure to America is limited, though it has just doubled its operation there in response to demand from the big consumer groups. At 11 times´ earnings and offering a dividend yield of 3.5% they are a good long-term bet on Eurozone recovery, even if immediate progress may be limited, according to Tempus.Shares of AstraZeneca have been laid low of late by 'profit takers,' but they are still up by 13% on the year. That reflects significantly more faith in the City about the ability of its new leadership team to turn the business around. As well, the backdrop to the healthcare market is bullish. People are living significantly longer, the global population is rising and people in emerging markets are becoming richer and able to spend more on their health. The company has opted to maintain its focus on pharmaceuticals instead of shifting into consumer healthcare. Hence the rethink of its research and development effors. Further, the dividend looks safe and the company still offers a dividend yield of 5.5%. Further, at a current year multiple of 9.5 and a forward price-to-earnings ratio of 10.0 the shares trade at a discount to GSK. If Mr Soriot pulls it off, investors could end up well rewarded although there are still significant execution risks involved, says The Daily Telegraph´s Questor team. ABPlease 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.