Tuesday tips round-up: Spirit, Berkeley, Britvic...

6th Sep 2011 06:53

Long before the pub group's demerger at the start of August, the City had largely labelled the managed operation Spirit Pub Company as a far more attractive proposition than the leased pub group Punch Taverns, says the Investment Column in the Independent. The maiden results from the two de-merged companies last week did little to dispel this view, with Spirit continuing to buck the economic downturn and Punch posting a 5 per cent fall in gross profits. As Spirit focuses its expansion on its Chef & Brewer, Fayre & Square and Flaming Grill brands, it has already started the conversion of up to 100 leased pubs to its better-performing managed outlets. We see this programme as vital to continued growth, as the model of directly managing pubs proved to be a winner during and after the last recession. However, with Spirit trading on an undemanding forward earnings multiple of 6.4, we think that without its struggling sister the managed group is one to watch. Buy, suggests the Independent.Mr Pidgley, Berkeley's chairman, told its annual meeting yesterday of forward sales in excess of £850 million, up from £813 million in April and £648 million a year before that, notes the Tempus column in the Times. As I wrote on Saturday in a review of the sector, the builders' problem is a lack of sites in areas where people want to live. This is not Berkeley's problem. Analysts were upgrading profit expectations for the current year, Numis Securities moving from £161.6 million to £181 million pre-tax. Some wonder if Mr Pidgley might accelerate or even increase that special dividend programme. Berkeley shares, up 57p at £12.35.5, are the most highly rated in the sector and sell on about 12 times' this year?s earnings. They may be set for a rest for now, but progress longer-term seems likely, says the Times.Britvic's share price has fallen sharply in recent weeks from a 2011 peak of around 440p, says the Scotsman. It has been a rotten summer in Europe and this has persuaded quite a marked reassessment of earnings prospects for the full year. The cold weather in June saw the soft drinks market fall over 8 per cent in the UK and 13 per cent in Ireland but the current rating seems to recognise the seasonal challenges but overlook the operational efficiencies and revenue generation capacity of this group. Buy, recommends the Scotsman.Hydrogen issued a strong set of numbers yesterday, says the Investment Column in the Independent. The specialist recruiter booked £80m in revenues in the six months to the end of June, up 45 per cent on the year, with £15.1m in net fee income, the key industry metric. The latter, up 14 per cent on 2010, is almost back to the levels seen before the economic slump. Looking ahead, the outlook for the world economy is not encouraging. That bodes ill for labour market trends in mature economies like the UK. But Hydrogen has an ace up its sleeve. It has been investing in its international operations, and opened an office in Hong Kong in April. Adding to the attraction is the fact that, despite making sensible investments in its business and posting higher profits, the stock trades on multiples of less than 10 times forward earnings for this year, falling to under eight times on the estimates for next year, according FinnCap. The Independent says buy.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.