Tuesday tips round-up: Brit Insurance, BP, Hochschild Mining...

21st Sep 2010 06:39

Private equity looked to be closing in on Brit Insurance, the sponsor of the England cricket team, on Friday after US firm Apollo was joined by peer CVC Capital Partners in making an improved bid of up to £870m for the insurance group.The Lloyds of London insurer said it expected to recommend the £10.75-a-share deal once the consortium had completed its due diligence and spoken to regulators. The shares are trading at 9 times 2010 earnings, falling to 8 times next year, with a strong yield of 6%. Given such a yield, hold says the Telegraph.After 153 days of turmoil, uncertainty and upheaval, BP shares rose on Monday after the company confirmed that the Macondo well had been sealed. For BP itself, significant challenges and dilemmas remain. Analysts think that the dividend - cancelled to cover the costs of the clean-up - could be reinstated by the final quarter of the year. However, this is not certain, nor is the size of the payout. Wait and see before investing again in BP says the Telegraph.On a 2011 multiple of 31.8 times forecast earnings, Hochschild Mining shares ain't cheap by any means, and the dividend yield of 0.69% is unimpressive at best, downright stingey at worst. But gold in particular has jumped to all-time highs on the spot market, with the futures market also moving ahead, which is all great news for producers of the shiny stuff. Miners like Hochschild serve as little more than a proxy to the prevailing market prices, buy says the Independent. RM, which has been providing computer hardware and software to schools for 30 years, has had a turbulent year, predominantly down to the Government's plans to cut education spending. But revenues are rising and the company has diversified its business as well as looking to more exotic climes to make sure the UK cutbacks are not terminal. It has lifted the dividend every year since 1994 and is valued at 8 times estimated 2011 earnings against a five-year historic average of 15.1 times. Buy says the Independent.Clipper Windpower's main claim to fame in the UK is that it is building the biggest offshore wind turbine here. As such it has consumed millions of pounds in government grants to little effect. Sales of turbines have fallen sharply, as the downturn has eaten into the appetite for investing in green power, and that has hurt. There's not really any reason to stick around says the Telegraph.Fears of a slowdown in British rail orders because of public spending cuts have weighed on the shares this year and Invensys is also uncomfortably exposed to Spain's dire economic woes. But the indications are that UK work already committed to will go ahead, although new schemes may be hit. The shares had been in retreat since the spring before recovering amid the bid rumours and now sell on 13 times' this year's earnings, which looks like a buying opportunity says the Times.Petra Diamonds is almost impossible to value because it has no obvious peers. Its house broker Canaccord Genuity has a 125p target price, based on a net asset value of 148p, itself reached by discounting future cashflow. Very speculative says the Times.Brokers suggests bingo and gambling group Rank "stands at a point of inflection" and that, having weathered the recessionary and legislative storms, it is ready to kick on and deliver sustainable growth. Even if its winning streak stutters, investors will be comforted by the presence of two big acquisitive overseas rivals on the share register. Hold says the Times.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.