Wednesday tips round-up: ARM Holdings, Petropavlovsk

24th Apr 2013 07:21

There is something to be said for companies who manage to significantly outperform their peers, but not a whole lot when they are trading at 40 times´ forward earnings. That is the case of chip-maker ARM Holdings, who yesterday announced first quarter figures which came in comfortably ahead of analysts´ forecasts, particularly in terms of sales and order backlogs. Even so, "Not necessarily one to chase at this level," writes The Times´s Tempus.Yesterday´s first quarter trading statement showed that precious metals miner Petropavlovsk retains sufficient financial flexibility to keep its creditors at bay, notwithstanding the drop in the gold price. It has renegotiated a large chunk of the debt which falls due next year while hedging half of this year´s production. As well, it has the ability to defer some large capital spending projects, which would allow it save about $250m this year. More importantly perhaps, its Russian gold assets seem simply undervalued. Even so, "this one is only for the brave."Petropavlovsk has investors worried about its ability to finance growth despite a falling gold price. After all, net debt for the group stands at about £787m compared with its market capitalisation of £250m. Nevertheless, The Telegraph´s Questor team believes the company´s Chief Executive was probably right when he told the newspaper that such fears are wide of the mark. Yes, the outfit will take longer to pay back its debt but access to financing is not such a problem in Russia and half of this year´s production is hedged against price fluctuations. "Trading on an earnings multiple of just 4, falling to 3 next year, the shares are a buy for the more speculative part of your portfolio," Questor 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