Thursday tips round-up: Sainsbury, Miners

30th Jan 2014 07:21

Incoming Sainsbury Chief Executive Officer (CEO) Mike Coupe, who takes over from Justin King, faces a daunting task at the supermarket. Not as much is being asked of him as was of Tesco boss Philip Clarke, who took over from Terry Leahy, but the challenge set out before him daunting enough. The UK grocery market is expected at a 4% per year clip over the next five years. To beat that the firm must either take market share from rivals or look elsewhere, even as discounters such as Aldi try to undercut it. As for an expansion into non-food, there he would face the entire internet. So if he opts not to try and expand overseas, perhaps one of the wiser decisions taken by his forerunner in the same post, then he will have to try to advance profits where he can and return excess capital to shareholders. Having said that, the stock offers a comforting 5% dividend yield. If he can maintain that while at the same time keeping the shares slow grind higher then he will deserve to be treated like a new King, says the Financial Times' Lex column. Anglo American and Antofagasta yesterday put out quarterly updates showing record output levels. They, in effect, joined Rio Tinto and BHP Billiton who had already done so previously. In essence, the sector downturn seems to have imposed discipline on these outfits, forcing them to improve operating performance, cut costs and cut the number of so-called 'greenfield' projects. The markets' view seems to be that Anglo American, for one, has turned the corner and that cycle of earnings downgrades by analysts has turned as well. There continue to be uncertainties surrounding the outlook for miners in general. What will be the impact of the forecast overproduction of copper? Just how much demand will there be from China? What will come of present chaos among emerging market currencies? However, "if the cycle has turned, as I have suggested before, the sector could be back in favour before long," writes the Tempus column in 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.