Tuesday tips round-up: Clarkson, Ladbrokes, Fresnillo

16th Apr 2013 06:58

A recovery in the world shipping market is at hand? Actually, no, it is in the doldrums, or that at least is the general perception. In fact, the ClarkSea index - which typically tracks the broking profits of ship broker Clarkson - is at a two decade low. Nevertheless, the company has been taking costs out of the business and taking market share. As well, last year marked the first time, in a decade, that the amount of tonnage taken out of commission exceeded the amount coming in. Hence the fact that shipping rates are still depressed. Yet the imbalance will correct itself and the shares are a good proxy for world recovery, writes The Times's Tempus column. A poor run of luck lately at Ladbrokes? The economy? Those seem like poor explanations for the company's lacklustre performance. In 2015 the bookmaker is expected to generate the same operating profits as in 2010, just over £200m, versus a 25% increase for rival William Hill. Thus the fact that it is trading at a significant discount to some of its peers, at 12 times forecast earnings against 14 times for William Hill. Might bankers smell an M&A opportunity here? Possibly, however, "buying Ladbrokes right now looks a little like putting your money on Aurora Encore at 66-1," says the FT's Lex column. Fresnillo is a well-run company with good assets, no debt and large cash holdings. However, to the falling price of precious metals must be added the rising production costs in the industry. Over the last year the company's price-to-earnings multiple has come down from 21.5 (with a dividend yield of 2%) to 16.6 (with a yield of 3.6%). Nevertheless, until the silver price - and Fresnillo - find a floor, this stock has to stay a hold, writes the Telegraph's Questor team. 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.AB