Wednesday tips round-up: Bellway (x2), UBM (x2), Xstrata

19th Oct 2011 06:34

In the year to the end of July, Bellway completed sales of 4,922 units; four years ago the figure was a record 7,638 units. Last year's figure was itself an advance of only 7% over the previous year, a time heavily impacted by economic uncertainties around the election. Welcome to the new normal, then. Bellway, like other builders, has responded by concentrating on the South East, a market that has been helped by the weaker pound and an influx of buyers from outside the UK, and building more higher-margin family homes elsewhere and fewer pokey flats. But most of the North remains difficult, and the company has its roots in the North East. Bellway shares have outperformed this autumn as the market took the improved performance on board and are now 25% ahead of their low in late August. This puts them on an earnings multiple for this year of almost 13; there seems little reason to chase at this level, says the Times.The Independent also looks at Bellway - and recommends buying the shares. Bellway trades at an enormous discount to its net asset value per share, forecast by Panmure at 921p for 2012, although the forecast yield ( 2 per cent) is nothing to write home about. On the downside, Bellway has faced criticism over its executive remuneration policies. For us that is a black mark. But we think Bellway is looking cheap now and merits a buy (we held at 760p last March), the paper says.UBM was a pure media business, but the printed word is of decreasing importance, magazines comprising only 12% of revenues and not quite 4% of profits, and most remaining titles have some synergistic link to events. This means less reliance on fickle advertising and more on more robust earnings from events. The shares sell on less than nine times this year's earnings and offer the support of a 5.5% dividend yield. A strong hold unless you take a very negative view of the global economy, says the Times.And the Independent has also covered UBM, like the Times giving it a hold recommendation. Because of the economic outlook we're still wary of upgrading to a buy, even if the valuation looks increasingly compelling. All the same, this is no time to exit, not least because of that yield, it says.Xstrata's third-quarter production report came out on a day when the mining sector was suffering one of its periodic bouts of weakness, the market having been spooked by some lower Chinese GNP figures. This seems a little perverse, as big mining projects span decades, but that is how the market works. The world's fifth-largest miner has lost 40% of its share price since its peak in April as the commodities boom came off the boil. At 5½ times' this year's earnings, the shares look like good value for the sector, says the Times.Interserve, the support services, maintenance and building group, has felt comfortable with reiterating its pledge to double earnings over five years. It's working in the right places and the right sectors (such as energy) that will help cushion it from the turbulence in this part of the world. The shares remain distinctly under-valued at 6.6 times forecast full-year earnings while yielding 6.2%, a yield which doesn't look under any threat, not least because payments to fill a hole in the pension scheme are predicted to fall quite sharply. Buy, 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.