Wednesday tips round-up: Northern Petroleum, Unilever

2nd Oct 2013 07:44

Oil explorer Northern Petroleum seems to have turned the tables on the market. Given the company's inability to develop more fully its main assets ? onshore and offshore gasfields in the Netherlands ? its share price has virtually halved since the start of this year. As a result, it quickly became a take-over candidate. Now its new management seems to have pulled off a part-takeover by another means. It will see the above assets while retaining a revenue stream. The result is that it now has almost as much cash in the bank as its market capitalisation. That will allow it to carry out seismic studies on its Adriatic assets and go ahead with the development of others. Northern has disappointed in the past and remains a highly speculative investment, although existing holders may as well stay in, The Times's Tempus column says. Despite Monday's warning-that-wasn't from Unilever the shares are still worth holding on to given their dividend yield of 4%. Nevertheless, the company's reputation for reliability has taken a knock. Following the "warning" Bernstein was taking a percentage point off earnings per share this year and next, which is hardly catastrophic. Yet this market doesn't like surprises, especially delivered outside trading hours. As well, the company seems to have failed to see any bounce from the recovery in the American economy. Then there is the high multiple at which the stock is changing hands, of about 18 times' earnings. Given market nerves, this looks fair value, Tempus says. 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.AB