Wednesday tips round-up: Capita, Halma, Northumbrian Water...

29th Jun 2011 06:36

Capita bosses were doing the Lambeth walk yesterday as they picked up a £60m, 10-year contract with the London borough to deliver a range of services. The scope of the deal could be widened to make it worth up to £300m over time. While others reliant on Government work for revenues have been feeling the pinch - we've already seen some go under - Capita looks like it will be a survivor. And yesterday's win is a demonstration of strength. Buy, recommends the Independent.FTSE 250 constituent Halma - which makes health and safety equipment - is not, perhaps, a company many private investors will have heard of, yet it should be "on the radar" having delivered 32 years of dividend rises of 5 per cent or more. The full-year results, released last week, made good reading, with a 21 per cent rise in pre-tax profits to £104.6 million as revenues advanced to £518m. Halma is focussing on increasing its exposure to emerging markets as well as China and India. The Scotsman recommends that any meaningful share price weakness is used an an opportunity to establish a position. Buy, the paper says.After Li Ka-shing, the Hong Kong-based businessman, said on Monday that he might bid for Northumbrian Water, all the water companies' share prices headed north in the expectation that his approach would not be the last. Analysts are now trying to work out what Mr Li might be prepared to pay. The shares, at their current price, yield 3.7 per cent. Analysts' views hinge on the premium Mr Li is prepared to pay to the regulatory asset value, the value of the capital employed in the regulated part of the business. There is no certainty of an offer; anyone sitting on a large gain should consider taking profits. Anyone keen on a gamble should stay in, recommends the Times.Thus far, we've been content to hold Millennium & Copthorne. Our stance, which was outlined late last year, was down to the surge in the hotelier's share price in the months before our note. The company was doing well, but the shares appeared to reflect much of that performance and, more importantly, the positive outlook. Since then, things have cooled down. In fact, if you pull up the price at the beginning of this year and compare it to current levels, you'll notice that the stock is down sharply over last six months or so. However, the hotels' recovery story remains intact, with updates from peers and industry indicators all pointing to continued gains for the sector, according to the Independent, which recommends a buy.Restaurant Group owns almost 400 outlets, including names such as Frankie and Benny's, Garfunkel's and Chiquito, which are popular with the younger crowd. The shares have come back sharply over the past couple of months, closing at 294½p after touching 335p at the end of May. Douglas Jack from Numis Securities thinks that recent like-for-like sales are on the up; bad weather encourages people into leisure parks, where the outlets are, and half them are near cinemas, where attendance is up. Others are at London airports, where footfall is also rising. The shares are not cheap, on about 13 times' earnings, but could be worth picking up for the longer term, suggests the Times.It may be involved in big projects such as the the Shard in London but WSP saw its shares suffer a sharp decline after a profit warning ahead of next month's half-yearly results. The engineering consultant said it now expected performance for 2011 to be worse than the year before, blaming a drop in public-sector spending in the UK that has particularly hurt its transportation unit. The fact that WSP's operations outside of the UK provide nearly two-thirds of revenues is positive, but, as Espirito Santo analysts note, the group "does not have sufficient exposure to areas of spend which are currently showing recovery, such as Middle East infrastructure and UK regulated spend". The Independent says sell.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.BC