Wednesday tips round-up: SABMiller, Pennon, International Power

20th Jan 2010 06:39

SABMiller shares, off 41p at £17.80 yesterday, are trading on about 18 times full-year earnings. Not cheap, perhaps, but far from stretched, given stronger forecast earnings growth than any of its peers. Hold says the Times.Water utility Pennon's confirmation it will continue with its progressive policy of growing the group dividend in real terms - at least up to the year ending March 2015. This is good news and, with the shares still yielding 4.1%, the payout is well worth having, particularly with the company's promise to carry on increasing the payout. Trading on a March 2010 earnings multiple of 15, the shares remain a buy for the yield says the Telegraph.International Power shares are now a hold for the yield, as they are likely to trade sideways at best for now especially as the takeover talk about GDF Suez has morphed into speculation that the two groups were in talks regarding partnerships or asset swaps instead. However, with strong capital gains as well some investors may want to take these profits and reinvest them elsewhere suggests the Telegraph.Yet again, it is hard to find anything to quibble about in IG Group's full-year results, with the company just topping its own recent trading statement. Given the company's prospects, a multiple of 13.4 times next year's expected earnings is not expensive and the forecast yield of 4.2% is commendable. IG can continue to perform well for the foreseeable future, and while its sheer size means growth might be slower than in previous years, we still think there is enough potential in the company to keep investors happy. Keep buying says the Independent.Chemring, the military goods manufacturer which last night posted a robust set of full-year results, faces some obvious headwinds. In the UK, whatever the results of the upcoming election, a defence review is on the horizon. The picture is no more inspiring in the US. The stock trades on an undemanding multiple of 11.5 times Investec's forecasts for 2010. That falls to 10.2 times for 2011. The prospective dividend yield - after yesterday's 43% increase - stands at 2.1% for 2010, and 2.4% for 2011. Hold says the Independent.Chemring's broader investment case remains: a still-small presence in its fastest-growing markets and the ability to supplement growth from product innovation through acquisition. At £29.66, or 12 times earnings, hold adds the Times.Cardiff-based IQE is best considered the biggest independent supplier of essential raw materials to a rapidly growing market. Its core business is providing the polished gallium arsenide surfaces on which wireless microchips are etched. For now, IQE's debt burden continues to fall ? to £15 million ? while restructuring during the downturn has left profits geared to improvements in sales. At 19p, or 19 times earnings, buy says the Times.Psion now makes rugged mobile devices for blue-collar workers, helping their employers increase productivity in a range of areas. The shares are not that cheap - trading on 15.4 times Singer Capital Markets' current estimates. But this is a turnaround story that looks sets to enter its most exciting phase. So 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.