Tuesday tips round-up: Hilton Food, Menzies, Andor Technology

3rd Dec 2013 07:12

Things are looking good for Hilton Food Group, but after the shares' advance year-to-date the company's stock seems to have gone high enough for now. On Monday Hilton announced its intention to invest an estimated 20m pounds at its Huntingdon plant to supply Tesco with packed meat. The agreement, which runs until 2019, or perhaps beyond that, will boost UK volumes by about 40 per cent, or an estimated 140m pounds. Unfortunately, a weaker performance in Europe - most likely in the Netherlands, Sweden and?Ireland - will cancel out some of the benefits from the Tesco contract. Nevertheless, analysts like the company's geographical diversity, including its growing presence in Australia. Even so, the need to invest to meet growing demand means that forecasts for profits for the current year have been cut, The Times´ Tempus writes. Steady as you go. Menzies' core distribution business is in long-term decline. However, management has been able to keep it in the blue and cash generative. The latter is being used to fund a handy dividend and, more importantly, diversify into new business areas - ground handling for airlines. Yes, it's a bit quirky, but it seems to work. The aviation business, which now contributes 60% of group underlying operating profit, is growing steadily. Nevertheless, stock in the company took a hit in early November, after warning that profits would be lower than expected after poor trading in the distribution business. More specifically, the outfit saw a worse-than-expected drop in revenues from supplements and children's sticker collection albums. The shares have fallen 5% since then and now change hands on 12 times forecast earnings for 2013, and 11.4 times' next year's profits. Nevertheless, the Daily Telegraph's Questor team recommends readers wait for a market dip before buying into Menzies as its share price is still near record highs of about 840p. Hold, Questor says.More than 80% of Andor's business of making highly sophisticated digital cameras for scientific applications is dependent, in one way or another, on state spending. However, while research budgets are being cut across the world the company's order books are growing again and were up 33% for 2014. Unfortunately, its latest set of full-year financials showed a dip in revenues and adjusted profits before tax. That weakened the company's negotiating position with Oxford Instruments, who has offered to acquire Northern Ireland's only quoted business for 500p a share. Andor says that it is looking for strategic alternatives, but with the share price at 502.5p markets do not seem to see a significant possibility that another bidder might appear for the firm. "The indicated offer values Andor on about 23 times earnings, though there is no guarantee that it or any other will materialise. Investors not keen to expose themselves to any further risk might choose to take profits, then," Tempus says. 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