Tuesday newspaper share tips: Dairy Crest, Mitie

20th Sep 2016 15:21

(ShareCast News) - Dairy Crest shares are still a buy, despite the most recent concerns surrounding increases in two of the key commodities which the company relied upon, The Times's Tempus said.Indeed, at least to an extent the drop in the stock after the company warned about the potential negative impact from rising prices for milk and cream, with the cost of the latter having doubled since the summer, the tipster said.Furthermore, higher milk prices also imply rising prices for demineralised whey, the byproduct the company sells to its partner Fonterra for use as an ingredient in its baby food.Discounting on its Cathedral cheese business is also set to decrease.More importantly, analysts are now visiting the plant at Davidstow, noth Cornwall, which makes the demineralised whey.Tempus expected the firm to announce that Fonterra was using the product in its own formula food, together with other ingredients, and with new customers possibly also signing up soon, the full potential of the venture would probably be realised in the following financial year."On 17 times' earnings, that fall in the share price looks like a buying opportunity, Buy," Tempus said. Mitie can survive its latest share price plunge despite the slowdown in contract awards from local authorities, according to the Telegraph's Questor column.The outsourcing company's stock tumbled 29% after lowering profits guidance for the year, as a result of economic uncertainty which had led to a reduction in spending by councils.Britain's decision to leave the European Union had only compounded the outsourcer's plight, with Questor describing it as "an unwelcome extra reason [for local authorities] to delay decisions about contracts this year."The company was already facing higher labour costs too, as a result of the national living wage.Nonetheless, Mitie, which provides services such as baggage handling at airports and hospital cleaners, may still be attractive for investors as a series of cost-cutting measures has been implemented by bosses.As well, stronger second half of the year is expected by chief executive Ruby McGregor-Smith, with the firm having already picked up a security contract with a large UK retailers and another to provide cleaning services to a major US bank."This profit warning served to ready investors ahead of the full announcement of first-half figures to September 30 on November 21," Questor said. "One analyst tentatively speculated that earnings could be off by a third for the first half, although others, including UBS, pointed out that the company still expects some revenue growth."Yesterday's plunge may not be the disaster first thought, according to Questor, who advises investors to HOLD.