Wednesday tips round-up: Tesco, Balfour Beatty, Dechra

13th Jan 2010 06:36

Tesco is leagues ahead of its UK competition in terms of global reach, scale and ambition. In fact, it is the only UK supermarket with any overseas operations at all, and one of just a few British retailers with international stores. The stock trades on a 2011 price earnings ratio of 13.2 times. Potential banana skins are an overly-draconian regulatory framework in the UK and the failure of one or more of its fledgling overseas arms to gain traction. Otherwise, the world remains Tesco's oyster. Buy says the Telegraph.Friday's trading update from Balfour Beatty, according to brokers, should show solid 2009 trading", with all divisions except rail" reporting good numbers. Balfour Beatty's stock, trading on a 2010 price to earnings ratio of 7.97 times, is not particularly aggressively priced. In fact, on that multiple, it sits at a rather cheaper level than most in the sector. The dividend yield is also a very respectable 4.5%. Parking your money in Balfour Beatty would be a sensible move for the long term, particularly given the shares' cheap valuation. Buy says the Independent.Pet products specialist Dechra's defensive attractions are clear. The resilience of expenditure on companion animals (typically one of the last categories of household spending to suffer) and longer pet life expectancies should work in its favour. The problem is that, with the US launch of Vetoryl out of the way, the shares may lack near-term excitement. Steady growth is growth all the same. With overseas sales of Dechra's portfolio of lower-profile novel and generic drugs set to keep profits advancing in double digits, at 474p, or 16 times current-year earnings, hold on says the Times.Even after a warning yesterday, stamp dealer Stanley Gibbons pre-tax profits last year should still be 10 % ahead of the previous year ? and should show similar growth this year. Longer-term initiatives are also promising. At 131½p, or eight times 2010 earnings, and yielding 4%, a strong brand and potential give reason to hold, the Times says.IT services group Computacenter put out an update yesterday for the year to the end of December, saying pre-tax profits would be "materially ahead" of the consensus expectations for £48.4m. The group is trading on 12.2 times full-year forecast earnings. There could be more to come. However, while the update was positive, we worry that signs of recovery in professional services will take some time to translate to big contract wins. So at the current valuation level hold, says the Independent.With the prospect of a 2.5 percentage point rise in VAT on January 1 providing an additional incentive to big-ticket buyers in the UK ? from where Computacenter draws more than a half of its sales ? last December was especially strong. The expected return of its French business to profitability and a highly incentivised management team (a long-term pay-out plan matures in 2011) only adds to the draw. At 309p, or 11 times 2010 earnings, buy on weakness, adds the Times.Engineer Weir shares seem pricey. They trade on a multiple of 15 times forecast earnings for 2010, according to brokers, and while a higher premium may be justified in the long term, given the company's own caution, they appear to offer limited upside in the short term. Hold 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.