Tuesday tips round-up: Charter, Bodycote, Halfords...

21st Jun 2011 06:47

When Charter International put out a statement yesterday that, although one side of the business accounting for about a third of sales was doing really quite well, the rest had suffered a bit of a slowdown, almost a third of the company's market cap disappeared and the shares ended off 179p at 537¾p. At the present level, the shares are on only eight times' the most pessimistic profits forecast, while the company has been the subject of bid speculation in the past. But not for the nervous, recommends the Times.The Independent says, Charter was hardly expensive at less than 10 times 2011 earnings before yesterday's share price crash and lower expectations were factored in, putting it at a discount to the sector. After the forecasts are updated, it could look very cheap. But yesterday's statement just isn't good enough. Behind the mangled language, it looks like a company in a bit of a state. Those who haven't bailed out should do so until things have settled, notwithstanding the possibility of a predator putting it out of its misery. Sell, the paper recommends.One of those engineering shares dragged lower by the Charter International profits warning was Bodycote, which ended 14p lower at 338p, says the Times. The share price fall did take the shine off some good news the company was keen to announce from the Paris Air Show. Rolls-Royce, which is one of the company's five biggest customers, has signed another ten-year agreement to continue to use Bodycote for the work to service and heat-treat its aero engine blades. The shares are on about 12 times' this year's earnings, which is relatively low for the stock, and could have further to go, absent any real economic meltdown, the paper writes.Halfords, the car parts and bicycle retailer, is a stock firmly out of favour with the market, reflecting the challenging macro-economic backdrop and more cautious consumer sentiment. On valuation grounds the shares look compelling, with the added attraction of a yield in excess of 5.5 per cent. The board's decision to recommend a 10 per cent increase in Halford's full-year dividend reaffirms its progressive dividend policy and confidence going forwards. Buy, recommends the Scotsman.Avocet Mining announced what was yet another set of positive drill results from its flagship Inata project in Burkina Faso. And yet the gold miner's shares continue to trade at more than affordable levels. At around 177p apiece, Avocet is trading well below City targets. Collins Stewart, for instance, has a target of 270p. Ambrian is eying 271p. Evolution is more conservative - but even then, its target of 252p still leaves ample room for upside gains. Buy, says the Independent.---BCPlease 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.