Thursday tips round-up: QinetiQ, United Utilities, Johnson Matthey

24th Nov 2011 06:26

In May 2010 QinetiQ started a two-year turnaround programme that would see the UK workforce cut by 10-15%, but contract delays in the British and US defence markets have continued since then, writes the Tempus column in the Times. "Yesterday's halfway figures, though sharply ahead of market expectations, managed to coincide with the stalemate on Capitol Hill over the US budget deficit that could well put further downward pressure on American defence spending," Martin Waller says. Tempus says that the shares are trading on an "undemanding" rating of less than eight times' this year's earnings. "Next year and beyond, though, markets will continue to be challenging....That two-year self-help programme is well on track and the company is better placed and more equipped to meet more difficult markets. But, given the uncertainty, there seems no reason to pile in yet."The Questor column in the Telegraph has marked water company United Utilities out as a buy, saying "take a dip in for the income". The firm plans to up its payout to shareholders by two percentage points above the retail price index until 2015. Questor says that while the shares are trading at 17 times current year earnings, it reflects the security of the income. "Questor recommended buying the shares on May 29 2009 at 538½p, and they are now 12pc ahead of that compared with a market up 17pc. However, the shares are an income play. Buy," the column says.The Times' Tempus column says, "If we are heading for a double-dip recession, then it is worth asking industrials such as Johnson Matthey just how they expect to cope this time around." The column notes that first-half sales rose 22% while profits increased by 19%. Meanwhile, the shares trade at almost 12 times' earnings. "The long-term drivers, tighter environmental legislation for vehicles and demand for its process technologies division from Chinese coal and US gas industries, are still there. But the shares, after a recovery from about £15 last month, look to be about where they should be."BCPlease 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.