Wednesday tips round-up: Reckitt Benckiser, Asos

22nd Oct 2014 06:50

Reckitt Benckiser's high valuation rating and predicted slow progress means that the stock is rated a 'hold', according to Martin Waller from the Tempus column in The Times on Wednesday.The comments come after a trading update from the consumer-products group, in which it reassured investors of its confidence in meeting the full-year target of 4-5% like-for-like sales growth, despite a slowdown to 3% in the third quarter.Reckitt also confirmed that it would be spinning off its pharmaceuticals division by the end of the year so it can focus on its high-growth brands such as Neurofen and Scholl. Waller said that Reckitt has, like any other multinational consumer-products companies, "spread itself over too many product lines".The stock trades at 19 times earnings. "Reckitt is outperforming in most of its markets, but that multiple does not suggest much to go for," Waller said.The Telegraph's Questor editor John Ficenec has recommended investors 'sell' shares of online fashion retailer Asos despite the market's hopes that the company has put the worst behind it.The stock jumped 15% on Tuesday - albeit only managing to trim a tiny portion of the heavy losses made so far this year - after annual results sparked optimism that the firm would be able to start rebuilding again in the aftermath of numerous profit warnings and a warehouse fire."However, Questor won't be jumping on this bandwagon just yet and is waiting for more evidence of a recovery in profit growth," Ficenec said.He had recommended to 'sell' in January when the shares were at 6,650p, yet the current 2,233p price target still does "not represent good value, trading on 45 times the revised profit [estimate]" for the current year.