Tuesday tips round up: Bovis, H&M

18th Aug 2015 10:14

(ShareCast News) - The Times' Tempus said Bovis's half-year results showed why the house builder was less attractive than some of its peers.Revenues rose 9%to £350.7m, but operating profit was up only 6% at £54.3m.House builders have had a licence to print money, the Times said, as ultra-low interest rates have driven demand and a long-term shortage of housing stock has limited supply.Investors were snapping up companies in the industry, the Times said, with Bovis hitting a record high of £12.06 last week, double the price at the start of 2013.However to invest in Bovis now is to believe that it can keep improving its return on capital employed when prospects could reduce as interest rates tighten, the above publication said.Tempus advised investors to avoid the stock, and said it was hard to see further upside after a good run.H&M's recent share price rally could come to a halt if it does not sharpen up in the next quarter's earnings release, the Financial Times Lex wrote.The clothing retailer recently opened another store in New York, which Lex said, could be because it needs the dollar."H&M has considerable exposure to weak European economies and rapidly slowing emerging ones, but has just a tenth its sales in the US," Lex wrote.The problem is, Lex said, that while sales have grown by more than 40% over the past two years, its profit margins have also slipped.Lex said without a better looking third quarter result, H&M's long held premium valuation could start to erode.