Tuesday tips round-up: Wincanton, AG Barr, Aberdeen Asset Management

24th Sep 2013 07:17

Logistics and haulage group Wincanton has been in intensive care for some time. However, as it renews contracts with its biggest clients, its shares are worth watching, as the rating is in value territory. The company is well diversified, with 12 per cent of the group involved in construction, 13 per cent in tankers, 15 per cent in fast-moving consumer goods, 25 per cent in groceries, 25 per cent in general merchandise and the balance in other haulage. As such, the company is highly exposed to economic activity in the UK, despite which it is slowly dragging itself out of intensive care. In the full-year to March 2013 it reported pre-tax profits up 11.5 per cent to 32.1m pounds. As well, net debt fell. However, the group is also struggling with negative net assets and a pension deficit that has widened to 149m pounds as bond yields have fallen. The shares arguably reflect all of these issues and more on a PE ratio of 7.4 times 2014 forecast earnings, falling to 7 times next year. There are signs that Wincanton is on the long road to recovery but The Daily Telegraph´s Questor team believes it is still too early to call exactly when that improvement will come. Hold.Soft drinks maker AG Barr was not able to close the purchase of Britvic and also missed out on buying the more international brands of Lucozade and Ribena from pharmaceuticals giant GlaxoSmithKline. However, the company yesterday posted strong interim results and announced its intention to focus on the UK. Furthermore, having eschewed another attempt at taking over rival Britvic may be no bad thing, given rising financing costs. As well, the company is now opening a new facility which will allow it to better manage its inventory levels (and cash-flows) and give it more leeway to increase its dividend pay-out. Progress has also been made in bolstering its pensions fund. AG Barr's shares are a quality holding with plenty of options for growth and based on this analysis it should provide a pleasant surprise on the full-year dividend. However, at 21 times 2014 profits its rating looks a little rich, so shares remain a solid hold for now, Questor says. Shares in Aberdeen Asset Management have fallen by a fifth since the end of May. The fund manager has about 40% of its assets in emerging markets or Asian ones, and these saw a sharp flight of capital in the summer after indications that the US Federal Reserve would start to taper off its quantitative easing stimulus programme. However, the investment case for emerging markets remains as strong as ever, in terms of economic growth, demographics and the rest. Not only that, but most of the firm´s clients are institutional, which means that they are less likely to run at the first sign of tensions. There is also the strong prospect of a return of capital to shareholders, probably a shares buy-back. So while quantitative easing, which is good news for such high-yielding stocks, will have to end some day, the current share price seems to be offering an attractive entry point. Buy, says The Times´s Tempus column. 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