Wednesday tips round-up: Tesco, ENRC, Northgate

9th Dec 2009 06:39

London-listed businesses with good overseas exposure should be winners in the next few years. The UK economy is likely to remain sluggish for some time, but there are good opportunities in emerging markets all over the globe. Tesco's trading update yesterday highlighted the importance of this trend. UK like-for-like sales growth was not that impressive, but its overseas business is starting to take up the slack. Same-store sales in the UK increased by just 2.8%, with total group sales, excluding petrol, up 8.8%. After the shares recent strong run they could now pause for breath but, because of the longer-term prospects for its financial services business and international expansion, the stance remains buy and Tesco remains the Telegraph's favoured UK supermarket play.Kazakhstan-based mining group Eurasian Natural Resources Corp (ENRC) is mainly a play on iron ore and ferrochrome, both of which are used in steel production. Chinese steel output is expected to rise next year, underpinning its markets.The mining sector has fallen sharply this week as the dollar strengthened, but this should be regarded as a buying opportunity. The outlook for the mining sector is positive and, with dollar weakness likely to continue next year, the outlook for commodity prices is upbeat. Trading on a December 2009 earnings multiple of 19, falling to 11.2 next year and just nine in 2011, shares in ENRC remain a buy says the Telegraph.Shares in van and car renter Northgate ? which have more than doubled since July's recapitalisation ? are one of the more geared plays on the wider economy. However, the lack of a dividend and a still-high level of net debt (some £706m, more than twice Northgate's stock market value) provide little incentive to pile in. At 237p, or 11 times earnings, avoid says the Times.The sale of Marken will be marked by followers of Intermediate Capital as the biggest capital gain notched up by the mezzanine finance provider in its 20-year history. Intermediate backed the company's buyout two years ago and will receive proceeds of £170 million, £68m of which is profit. Intermediate's shares continue to trade at a 30% discount to brokers' estimates of net asset value if its nascent fund management division is ignored. At 284¼p, there is every reason to hold on says the Times.Plastics group Victrex is being helped by a weak pound ? only a fraction of its sales are in sterling ? and improved demand from automotive and electronics customers. But Victrex's short order book means that it can never see too far ahead, while, at 795½p, or 18 times earnings, the shares trade at a premium to their peers. Look to buy lower down suggests the Times. 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.