Wednesday tips round-up: BP, Weir Group, GKN

31st Jul 2013 06:37

BP's shares dipped on Tuesday after its second-quarter results missed forecasts. But the main problem is that it remains unclear what BP is getting from its new position in Russia after selling its 50 per cent stake in TNK-BP, according to the Financial Times' Lex column. The company sold its holding in the Russian unit to Rosneft almost a year ago in exchange for a 19.75 per cent interest in Rosneft and 12.3bn dollars in cash. While TNK-BP was a corporate governance nightmare, it was producing plenty of oil and cash. The question hangs over the value of the Rosneft stake. The Russian company is the world's biggest listed oil and gas producer, accounting for 5.0 per cent of global daily production. "Owning a fifth of that is a big deal, yet BP's second-quarter numbers did not get much of a boost from the stake," Lex said. The integration of Rosneft and TNK is a work in progress, the column added.Weir Group's shares spiked following a reassuring interim statement on Tuesday, The Telegraph's Questor column noted. Weir, which makes industrial pumps and valves for miners and oil and gas producers, has had negative sentiment surrounding its shares because of the company's exposure to US shale gas operations, which slowed as the gas price fell, and the mining sector, which is cutting costs. Such concerns prompted many investors to take short positions, betting that Weir's shares would continue to decline. Tuesday's gain is likely to be caused by a "short squeeze" as investors who had sold the shares expecting a fall bought them back. The results were roughly in line with expectations, with pre-tax profits falling 14% to £193m on revenues down 10% at £1.2bn. Although the market remains challenging now, the company operates in sectors that show good long-term growth. Questor said short-term negativity is overplayed and recommended a 'buy', up from 'hold'.Plane and car parts maker GKN reported better than expected first half results on Tuesday boosted by its commercial airline operations which provides airframes to Boeing and Airbus. A jump commercial aircraft-related sales offset a fall in military applications. The company also benefitted from the fact that Boeing and Airbus have increased their production to record levels as airlines buy new jets with better fuel efficiency and travellers in emerging markets make more journeys. Last year's purchase of Volvo's aerospace business resulted in total group sales rising 12% to £3.9bn in the six months to June, Questor pointed out. Pre-tax profits fell to £134m from £279m, primarily due to foreign exchange rate changes impacting the mark-to-market value of foreign exchange contracts, as expected. Profits were otherwise up 5.0% to £278m. "The interim figures were good and the group is plugged into some end markets with solid long-term drivers. Questor continues to rate shares in GKN a buy."RDPlease 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.