Wednesday tips round-up: Provident Financial, GKN, Fresnillo...

2nd Mar 2011 06:43

Long-term sceptics of doorstep lender Provident Financial say the big concern is Provident's capital position. The company again refused to give a figure for its surplus cash position - the concern being that it wouldn't be great news and could be as low as £20m rather than £50m or £60m that is often presumed.Provident said it would pay its 38p dividend but analysts are concerned the company can't afford it. The company generated £80m of capital but the dividends totalled £85m - the third year running in which dividends have exceeded capital generation. Sell says the Telegraph.GKN has a strong balance sheet, a good emerging-markets presence that should help to take up the slack elsewhere, and the benefit of aerospace growth taking off just as the resurgence in the auto industry begins to settle down. Moreover, the shares remain affordable, trading as they do on a forward-earnings ratio of 10.1 times. With plenty of ground still to make up from recessionary falls, there is still much headroom for future gains. Don't give in to temptation to take profits. Buy says the Independent.Higher prices - silver has been bouncing around a 30-year record -underpinned what were strong results from miner Fresnillo last night. The update gives solid grounding to the stock, which is up around 50% since the beginning of September. Recent data on inflation has also been less than cheery. Coupled with the strength evidenced by the results, the shares may well scale fresh heights in the months ahead. Buy says the Independent.It's time to sell any HMV Group shares you might own, as this dog has had its day. The music and book retailer yesterday released yet another profit warning - its fourth since September - revealing that trading conditions have remained challenging since it last updated the market, and that full-year pre-tax profits will be "moderately below expectations" of £45m. While HMV's banks remain supportive, the news makes a break-up of the group far more likely. Tuesday's announcement also removes any lingering hopes of a final dividend.Sell says the Telegraph.A wash of red ink sent outsourcer Xchanging into a £55.6m operating loss last year and there is, needless to say, no dividend. The shares, which have collapsed from 213p last July, fell almost 1% to 55¼p. A cost-cutting and restructuring programme is under way, but, without any positive news, the shares should be avoided for anyone without a strong taste for risk says the Times.Insurance broker JLT shares, along with much of the rest of the sector, have been boosted by bid speculation and are up about a third on the year. This seems implausible; Jardine Matheson has 30% and is an unlikely seller. But the shares sell on a little more than 14 times this year's earnings, a rating below that enjoyed by JLT's bigger American rivals. A strong "hold"; buy on weakness says the Times.Distribution group Bunzl delivered again on Monday with annual profits ahead of expectations and an increase in the full-year dividend for the 18th year running. For this year, the shares are trading at 12 times estimated earnings and a dividend yield of 3.2%. For 2012 forecasts, Bunzl is trading at 11.2 times earnings and a 3.4% yield. Bunzl believes it is a "GDP plus" business and well placed to benefit from recovery economies in North America, Europe and Australasia. Buy says the Telegraph.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.