Tuesday tips round-up: Autonomy, Mears, RPC

17th May 2011 00:01

Autonomy is buying the digital storage assets of Iron Mountain, a quoted American company, for $380m (£234m). The City, which has an unsteady relationship with Autonomy, was generally in favour of the deal, not least because it clearly is an area the company knows well, which should mitigate risk. The shares are on about 22 times' this year's earnings. Hold, pending future developments, says the Times.Mears, the social housing repairs and services contractor to local authorities, appears to be doing rather well in these austere times. Yesterday, the group, which is also a provider to registered social landlords, said it had secured £120m of new contracts since it unveiled its full-year results on 15 March. It now trades on a forward earnings multiple of 7.2 on the estimates for 2012, a discount to both its support services and its contracting peers. Based on this lowly valuation and in light of the recent strong momentum, we think that Mears is worth a punt, says the Independent.RPC makes rigid plastic packaging in 11 countries in the European Union and the United States. There are issues with RPC not least rising polymer prices, its raw material. However the company is usually able to pass these costs quickly on to the customers. The pace of RPC's acquisition programme might cause some concern but looks consistent with the group's trading ambitions. RPC's rating does not appear that demanding. RPC could merit further inspection. Buy, says the Scotsman.ITE posted what by most analyst accounts was a strong set of half yearly results yesterday. The exhibition and conference organiser said adjusted pre-tax profits had climbed by a healthy 42% as its core markets returned to growth. ITE's shares trade on affordable multiples of around 15 times forward earnings. Buy, says the Independent. It's been a rough ride for Xchanging ever since it floated in 2007, and this year has been particularly bad thanks to one day's trading in February when the outsourcer saw its share price halved after an unexpected profit warning and the resignation of its founder, David Andrews. Management remind us that 2011 is a "year of transition", and we are not much clearer on how Xchanging will look at the end of it. The initial signs do provide some optimism, but there are too many unknowns for our liking. Sell, the Independent says.Martin May reckons he will be the only chief executive to have taken a quoted company off a full listing and on to the junior Alternative Investment Market and then to have restored it to the main market again ? and, indeed, he may well be. Cape dropped on to AIM in 2002 with a mass of problems, including damaging asbestosis liabilities, the market worth at one stage falling to just £3m. The company is now focused on providing services to the oil and gas industries and other resources companies. The shares have had a good run but still sell on 11 times' this year's earnings. Longer term, they should have further to go, says the Times. Shares in pork products group Cranswick had been falling of late, with investors concerned about the market backdrop and inflation. However, the numbers showed that these fears were overdone. Pig prices are likely to continue to rise into 2012 as feed costs rise, but the company has invested a substantial amount in its facilities in recent years and continues to be well positioned to deliver growth longer term. The shares are trading on a March 2011 earnings multiple of 10.7 times, falling to 9.8 in 2012. Buy, says the Telegraph.---RGPlease 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.