Tuesday tips round-up: Morgan Sindall, Centrica, Imperial Tobacco

9th Aug 2011 06:48

Cautious optimism is about the best one can expect from a business such as Morgan Sindall, so heavily exposed is it to a range of activities in construction. The shares have been trending down since the start of the year and sell on less than eight times' earnings and have the support of a yield approaching 7%, but it is difficult to see them as anything more than a hold, says the Times. Centrica has four major brands: British Gas, which trades as Scottish Gas north of the Border; Centrica Energy; Centrica Storage; and Direct Energy. British Gas supplies gas, electricity and "services" to UK residential and business customers and has about 15.7m clients. Centrica's shares may not be the most exciting but, offering a yield of around 4.5% and on a conservative price earnings ratio of nine, they look an attractive commitment to the oil and gas sector. The Scotsman says BUY.If you have any cash to spare, now could be a good time to hunt down bargains. Of course, it is impossible to time a market top or bottom, that's why drip-feeding money into falls is a good idea - providing you pick quality companies. If you can buy high-yielding share in a broad-based sell-off - when good shares are dragged lower with bad shares - then you can reap the benefits for many years to come. Reinvesting dividends is a sensible investment strategy that can grow your wealth substantially over time. Imperial Tobacco fits this bill. Buy, says the Telegraph.It has taken a surprisingly long time for Chariot Oil & Gas, the AIM-listed oil explorer focused off the coast of Namibia, to find partners to develop two of its three blocks there. The company had vaguely looked at other areas in Africa but is now sticking with Namibia. Chariot shares are undeniably a better prospect than when they floated, because the blocks are much farther down the road to full production, but they are still only for those prepared to risk losing their capital, the Times says.However, the Independent notes that the stock has been pressured since hitting the peak of more than 300p apiece in early March. Part of the weakness may well have been down to disappointment among those eyeing a farm-out earlier in the year. Now that Chariot has delivered, we'd move in for the upswing, the paper, which recommends buying the shares, says.One of the worst performing shares in the recent turbulence has been Weir Group, off 28% over the past fortnight. The concern was that global economic slowdown would hit sales of its pumps to the oil and gas industries. Weir's affairs are studied with some interest by the board at the smaller Hill & Smith Holdings, which also supplies big power plants, in its case with pipe support systems. Its own share price has not suffered as much, because the group also provides equipment for motorways and galvanising services to industry, but the shares still lost 32p to 280p on some uninspiring half-way figures and a cautious outlook statement. The shares are on a little more than eight times this year's earnings, but there seems no compelling reason to buy at this stage, says the Times. Avon Rubber focuses on three major businesses: it provides rubber products for defence companies, liners and tubing for dairies to milk the cows, and gas masks for the military and emergency services. The group announced yesterday it had landed a lucrative three-year contract with the US Department of Defense. The deal will see Avon provide filters for use with its M50 gas mask, with the maximum contract value at $38m, and an initial order value of $11m, which will be completed this year. The analysts were happy with the news, with Edison saying it supports its positive view on Avon's business "in these uncertain times". Besides, investors should note that the stock trades on just 8.5 times estimated earnings for next year, according to Altium, offering ample scope for upside gains, the Independent says.Telecity, which operates data centres around Europe, appears better equipped than most to weather the current financial storm. Barclays Capital put it neatly: during the financial crisis of 2008/2009 the company delivered record growth. And the momentum established then appears to have continued. All the same, pricing has proved soft in some of Telecity's markets and even though the shares have fallen sharply recently, they are not cheap on 23 times forecast full-year earnings, which puts them in line with international rivals but on a premium to local peers. So, while the strong prospects argue against a sell view, the valuation weighs against buying. Hold, says the Independent.Gulfsands Petroleum shares have been hit very hard this year because its most important operation is in Syria. The country has been a flashpoint of Arab spring protests - and trouble has been escalating over recent weeks. Yet, despite this turbulent backdrop, Gulfsands posted an excellent operational update yesterday. The shares are trading on a December 2011 earnings multiple of 3.6, falling to 3.4 next year. Hold, says the Telegraph.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.---RG