Tuesday tips round-up: Tesco, Kier, Diploma...

23rd Nov 2010 06:43

Tesco has already gobbled up Britain. Now it's looking to repeat the trick in Asia and there's a good chance it will pull it off. The group has sought to whet investors' appetites by flying analysts out to the region to show them what it is up to, unveiling some fancy looking targets for the Chinese operations in the process. The prospective yield of 3.4% compares to Sainsbury's 4.2% and Morrison's 3.6%. But Tesco's growth prospects eclipse these largely domestic plays. It deserves a bigger premium. Buy says the Independent.Yesterday's acquisition news from Kier demonstrates some of its attractions. Although relatively modest - with a maximum price tag just shy of £2.5m, plus another £487,000 in the form of a loan repayment - Kier's purchase of renewable energy group Beco is strategically important. The deal brings the capability to design and deliver PV installations across the UK. At 10.5 times full year earnings the valuation, for a construction group, is no longer as cheap as it was. Hold says the Independent.Diploma put out a strong set of results yesterday, with adjusted pre-tax profit topping expectations at £32.2m, up 26%. Free cash flow was up from £23.5m in 2009 to £29.8m. Brokers put the stock on a price of 14.8 times 2010 earnings falling to 13.8 times, which looks good value for a growing business. Buy says the Independent.At the start of the year you could pick up Diploma shares for little more than 170p, but they have put on a quid since. They sell on more than 15 times this year's earnings but are a strong hold; buy on any weakness adds the Times.Shares in Mitie have fallen about 13% since the start of the year. The board of the outsourcing specialist has been keen to convince the market that public spending cuts in Britain are not going to impact much in the long term. The shares are on about ten times this year's earnings. Given the uncertainties long-term, about right for now says the Times.Cookson's core division makes ceramic and other products for steelworks and was expanded at just the wrong time, at the end of 2007, by the purchase of another established industrial company Foseco. The market is beginning to take a different view of Cookson. The prospects are for a 5% increase in world steel production in 2011, according to industry estimates. The shares are on about eight times' next year's earnings, which looks a bit cheap if you think the world economy will continue on an upward trend says the Times.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.