Thursday tips round-up: UK Mail, Plus 500

21st Nov 2013 09:25

Wednesday's halfway figures from UK Mail revealed average daily volumes at its parcels business, which accounts for 43 per cent of revenues, up by 25 per cent. In turn that drove a 67 per cent rise in operating profits in like-for-like terms. Meanwhile, the mail business was up a bit and gained further market share. Furthermore, the company stands to gain from the privatisation of Royal Mail, for whom it delivers parcels the "final mile" to the customer's door. If Royal Mail gets its act together and brings in the efficiencies expected, it can cut prices and these can be passed on to UKMail's clients. Nevertheless, if ?Royal Mail improves sufficiently in the longer term, it might become a more serious competitor again. Just don't expect this to happen soon. The shares have come a long way this year and sell on almost 20 times' earnings. High enough for now, one suspects, says The Times's Tempus. AIM-listed stocks are a high risk option. Yet if the audited numbers at trading company Plus500 back up the figures in Wednesday's trading update then the growth and dividend potential of this company, backed by cash generation, is compelling. The firm, which operates a trading platform, announced that revenue for the year ended December would now be significantly ahead of market expectations, sending shares soaring 20%. Revenues in the nine months to the end of September rose by 52.7%. Furthermore, the company's stock is changing hands at a price-to-earnings (P/E) ratio of 11.6 times, falling to 10.7 times next year, a significant discount to sector peers on an average P/E ratio of 17.8 times. Lastly, Plus500's Chief Executive said that he plans to return more than half of all profits to shareholders in the future. The Daily Telegraph's Questor team retains its positive view on the shares and again says 'buy'. 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.AB