Thursday tips round-up: Telecity, CSR, Smurfit Kappa

10th Feb 2011 06:37

Telecity builds data centres to anticipate demand two or three years ahead, and these provide revenue growth, while increased digital use boosts useage of existing facilities and so revenue per square foot. The shares are on about 21 times' this year's earnings. This looks expensive; but the shares are a good long-term position on the growth of the digital economy while lacking the nerve-shredding volatility of other less asset-rich internet stocks such as Autonomy or, indeed, CSR, says the Times.The Independent says hold. Telecity has played a good game so far, and bid rumours continue to circulate, which should at least provide a floor for the share price. There is an argument for taking profits but on balance, despite a pricey rating of 22 times next year's earnings, we'd keep holding for the moment, the paper says. When last we met CSR, the Cambridge-based semi-conductor maker was sufficiently unhappy with its share price to set aside $50 million of its huge cash pile to buy shares back. The shares have been encouraged by the settlement of a long-running US lawsuit with Broadcom on roughly neutral terms and the takeover of a competitor and are on about 15 times' this year's earnings. High enough until the outcome becomes clearer, says the Times.But the Independent says buy. The shares also remain attractively priced. In terms of enterprise value to earnings before interest, tax and amortisation, CSR is on just 7 times forward earnings for 2011. That leaves it at a discount to the wider semiconductor sector, something that should begin to change in the wake of last night's results, the paper says.Paper-based packaging might not be sexy, but the market leader, Smurfit Kappa, has been a good earner over the past 12 months. When the Independent looked at the stock in January 2010 there were still risks associated with buying into a company that recorded a €52m (£44m) loss and a revenue slump of 14 per cent the year before. The bogeyman is commodity prices. Smurfit Kappa is already feeling pressure on its margins from hikes in raw material costs, from wood to energy. We would prefer to quit while we're ahead, says the Independent. 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.