Wednesday tips round-up: Burberry, Pearson, Chemring...

19th Jan 2011 06:40

The extraordinary rise of Burberry, since the brand was reinvented and rescued from chavdom, appears to be accelerating.Like-for-like sales in the first half of the financial year were 9% ahead; in the third quarter, including Christmas, they were up 14%. The shares, below six quid at the start of last year, have virtually doubled and now sell on about 25 times this year's earnings. Don't count on their coming back to earth soon says the Times.Education is a fast-growing market in India, where the government invests $40bn a year, a sum matched by consumer spending on private education. This is only going to increase after the government committed to improve access to learning opportunities across the country. Pearson has set out its stall to follow this and other opportunities in growth markets including Brazil, South Africa and China. The group is set to release a full-year trading update today, which is expected to be pretty solid. Yesterday's Tutorvista acquisition in India is small in terms of the cost but reaffirms the drive into the emerging markets, and investors can expect a few more deals to come. Buy says the Independent.Shares in shares Chemring took a battering in the summer as the market became spooked over the effects of defence cuts. The company makes countermeasures such as chaff, devices to counter improvised explosives, non-lethal pyrotechnic devices such as smoke bombs and munitions. Those fears appear overdone. About half its business is in the United States, for example providing flares for aircraft such as the F-22 and the Joint Strike Fighter. The shares are on about 11 times this year's earnings, a little below their comparators in defence and look like a good long-term bet says the Times.The problem with spread better IG as an investment is there is very little visibility of future income. The markets will do what they will do. The company is adding to its UK and Australia customer base at a reasonable rate and growing more quickly in continental Europe and Singapore. But much of the growth was to have come from the United States and Japan, where IG paid £122m for an established business in October 2008, but wrote it off yesterday. IG shares are on about 14 times this year's earnings, which feels high, although they yield about 4% for the current year. No real reason to chase says the Times.Plant hire group Ashtead's shares soared by 11.1p yesterday on the news it was walking away from the deal to buy Lavendon. The Lavendon deal did make some strategic sense for Ashtead, but the group should concentrate on its US business. The stock has already more than doubled in price since October. The trend will continue. Buy says the Independent.Carphone Warehouse's decision to demerge from its Talk Talk broadband division in March 2010 increasingly looks inspired. Its shares have more than doubled since it started trading as a separate entity at 135p last March. Carphone Warehouse now looks pricey on nearly 22 times forecast full-year earnings and, on this basis, cautious investors may want to hold. But there's value in buying into a growth company. 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.