Wednesday tips round-up: Severn Trent, De La Rue, Gulfsands

27th Jan 2010 06:56

Severn Trent's chief executive, Tony Wray, has now confirmed the water utility has no plans for a rights issue, although it is cutting the dividend by 10%. The Independent generally is bearish about the water sector, but Severn Trent, which trades at about 1.5 times next year's earnings and yield more than 5%, could be a rose among thorns. Buy says the paper.De La Rue made no mention of Camelot in yesterday's third-quarter trading update, but that did not stop Cazenove, the company's broker, estimating that it could receive £90m in proceeds from a sale, with about £30m finding its way back to shareholders. De La Rue's defensiveness and slow but steady growth is out of step with a stock market still looking for stocks exposed to cyclical recovery, but at 946p, or 13 times current-year earnings, and yielding 4.5 %, it is worth holding says the Times.Shares in soap and shampoo maker PZ Cussons trade on just under nine times next year's forecast earnings, which, in global terms, makes the company looks relatively cheap. While Britain looks torpid economically, the levels of world growth forecast should help PZ Cussons's sales. Keep buying says the Independent.Lonrho, the pan-African based conglomerate, is one simple way to invest in African development. Frontiers are, by their nature, dangerous places so this investment must be regarded as speculative. The company is still loss-making and is expected to post its first profit in the year to September 2011. It is expected to start paying a dividend in the following year. Buy says the Telegraph.Yesterday's fourth-quarter update from gaming software group Playtech was solid. This, coupled with a recent strategic deal with Scientific Games in the US, has prompted a spike in the shares. The company appears to be slowly recovering from its management credibility issue - and there may be more good news ahead. However, with the shares on a December 2010 multiple of 13.4, hold says the Telegraph.Last August, Sinochem, the Chinese oil group, made an $880m all-cash takeover offer for Emerald Energy ? the UK-listed company that held the remaining 50% stake in Gulfsands's Syrian assets. Although Gulfsands is not viewed as a short-term seller, that deal did nothing to diminish the view that one day Sinochem will come for the other half, too. At 274¼p ? a price equivalent to its estimated current net assets ? buy on weakness says the Times.Engineer and galvaniser Delta is being helped by Australia's strong stimulus spending on roads and public buildings, and the Asian demand that has underpinned its mining sector. At 148p, or nine time earnings and yielding 5%, hold says the Times.Porvair, which designs and manufactures specialist filters for a variety of industries, yesterday reported a disappointing £1.7m in full-year profits before tax and one-offs, down from £4.2m in 2008. Porvair trades on a steep multiple of 20.9 times forecasts for 2010. That said, the shares are off their highs, and the company's earnings could recover quickly. There's enough here to make Porvair worth holding 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.