Tuesday tips round-up: Electrocomponents, European Goldfields, Avanti...

4th Oct 2011 06:38

It's nearly two years since the Electrocomponents share price has been this low, says the Investment Column in the Independent. The aptly named distributor of electrical components has been under the cosh because of worries about the world economy. Taken as a whole, the first half numbers look fine and dandy: group revenue grew by 11 per cent year on year, with the international business up 14 per cent while the UK (surprise surprise) managed 5 per cent. However, that growth is slowing: in the second quarter group revenue grew by only 8 per cent year on year, the international business by 11 per cent and the UK by only 2 per cent. If you want yield there are better, more defensive places to get it. And we don't see sentiment towards the company improving any time soon, as the market focuses on the economic outlook. Sell, the Independent recommends.Beggars can't be choosers and, with Greece now having been reduced to the eurozone's biggest mendicant, getting $680 million of funding for goldmines there and in Romania was never going to be easy. So the Greek Government has allowed the sale of a bit of the family gold and cleared the purchase of 9.9 per cent of the shares in European Goldfields by the Qatari sovereign wealth fund, writes the Tempus column in the Times. The Qataris are also lending $600 million over seven years at a rate of Libor plus 7 per cent, which is a rather better deal than is on offer to most Greek corporates. The company is raising another $150 million from the issue of unsecured loan notes with warrants, so there is now enough funding in place for the existing prospects to be developed. The 19 per cent jump in the shares yesterday to 622½p says it all; better some sort of funding and a new supportive investor than no funding at all. The Qataris, who a couple of months ago agreed the funding for the merger of a couple of Greek banks, could take their holding to almost 30 per cent. It is just feasible that the deal could tempt out another bidder with a more attractive price, so those with an appetite for risk, or who want to continue to participate in what will be Europe's biggest gold producer, should hang on. Others might consider taking some profits, suggests the Times.In Italian, "avanti" is an exhortation to drive a team, or people, ahead. The satellite broadband operator of the same name has certainly made progress in the past year, even if profits have gone "indietro" or backwards, says the Investment Column in the Independent. The pre-tax loss in yesterday's update was only what management had predicted, increasing from £2.4m at the end of June 2010, to £12.8m a year later, and the share price was only slightly behind as a result. The group also announced four new contract wins yesterday, the largest being a $2m two-year deal with Bentley Walker for broadband in Afghanistan. Avanti's pipeline has continued to grow since April. The shares, however, have tumbled and trade at two-year lows. We'd pick up a few, says the Independent, who gives Avanti a buy rating.An analyst's note on the British software being bought by Aveva describes it as "hardware agnostic". What this actually means is that it can work on a number of different hardware platforms, says the Tempus column in the Times. Aveva, which makes software to help to design oil and gas and power plants and other forms of industry, is buying Z + F UK, the British division of a German company, for £6.3 million. The software allows the display of 3-D images once these have been captured by a laser camera; the German parent wants to concentrate on the production of the cameras themselves. Taking the software in-house will allow Aveva to sell it to a wider range of customers. The shares, which lost nearly 4 per cent to £13.52½ in yesterday's market turmoil, have tended to sell on a relatively high multiple, about 20 times this year's earnings, but are worth tucking away on any weakness, recommends the Times.Ouch. That is the word that comes to mind when you look at the reaction to yesterday's update from Patsystems, the trading software firm, says the Investment Column in the Independent. Its stock fell by nearly 40 per cent after it said that the board was expecting "only modest profits for the full year". The business has been hit by delays in closing some key deals with exchanges. The company had expected to conclude the deals by the end of the year. That, unfortunately, is no longer the case, though, on the upside, discussions are continuing. So, although the sharp share price fall does tempt us to pick up some shares at what looks like a bargain price, we think that, with the economic outlook turning darker and darker, the risk is too high to wade in. Hold, the Independent suggests.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.