Wednesday tips round-up: Babcock, Drax, Asos...

10th Nov 2010 06:59

Babcock's hope is that its market rating, about 11 times next year's earnings per share, will edge forward to reflect its involvement in support services, where shares tend to sell on a multiple of nearer 14. This will take time, but the shares remain a strong hold says the Times.Coal-fired power station Drax's business model is to pay out about half of earnings in dividends. This year, analysts are forecasting eps of about 61p, putting the shares on about six times' earnings. The dividend sounds attractive, but by its very nature this is an erratic income. An odd stock, and only for those wanting a punt on future energy prices says the Times.Blinkx gets most of its revenue from the advertising that accompanies the videos accessed through its engines. Traffic has tipped over to a level at which it cannot fail to make money, assuming no one does anything very silly ? the average during the first half was 31.6 million searches, against 13.1 million last time. Meanwhile, there is the prospect of its product going onto developing platforms such as mobile phones and internet TV. Promising but highly speculative; not for widows and orphans, says the Times.Investors in online fashion retailer Asos should hold on to the shares for the next six months but then consider taking profits as the Telegrapgh wonder wonder how long its stunning sales growth can continue. Operating costs increased by 26p% over its last full year. While costs fell as a percentage of sales fell, that is a big increase in overheads for any business, however stunning sales are. Hold says the Telegraph.G4S is a cheap way to play the growing outsourcing trend, not just here but around the world. The company, which began life in Copenhagen in 1901, now operates in 120 countries. G4S's latest scalp was a move into Brazil this summer, which has got the company's management very excited. The shares are trading on a price to earnings ratio of about 12.4, falling to 11.5 next year, and currently yield 3% and a dividend of 7.67p. G4S is a defensive stock likely to look good in the better times as well as the bad times. Buy says the Telegraph.Schroders looks like a bastion of stability in the world of fund management. This bluest of blue-chip managers has had its fair share of ups and downs. But recently it has quietly gone about the business of picking up mandates and making money without making a big song and dance. Fund managers are a geared play on the markets, and equity markets have recovered strongly recently. But there are enough uncertainties out there to suggest that, at the very least, stockmarkets may pause for breath over the coming months. Schroders has been a great performer, now looks an ideal time to some take profits suggests the Independent.AIM-listed Polo Resources, which invests in undervalued natural resources companies and projects, saw its shares soar by nearly 10% yesterday. A successful takeover of rival Caledon, where it owns 27.6%, will drive Polo's NAV to 7.22 per share. Unless Polo suddenly decides to ramp up its investments elsewhere, this suggests that the company may well move to return some capital to shareholders. Time to buy says the Independent. Theo Fennell's shares trade on 15.1 times forecast earnings for calendar year 2011, which is a substantial discount to luxury fashion rivals Burberry and Mulberry. We said buy these shares at 35p in June. With the company looking in reasonably good shape, there's every reason to hang on in there. Hold says the Independent.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.