Wednesday tips round-up: Tesco, Whitbread, Halma

17th Jun 2009 06:46

First-quarter results from supermarket group Tesco were very good but the shares are sitting at a prospective February 2010 multiple of just 12.2 times, a discount to its rivals.This discount is unwarranted. Shares in Tesco were first recommended at 329¾p in December. They remain a buy and are still the Telegraph's favoured supermarket play.Whitbread seems set to take advantage of any wider recovery in the economy. Also, in its favour is a strong balance sheet, aided by an ongoing cost-cutting programme. On a forward price-earnings ratio of 9.2 times, the shares are now cheap say some analysts. Buy says the Independent.Whitbread's shares, off 3p to 847½p, have risen 22% since March but at 11 times full-year earnings are still trading at a discount to hotel peers and yield more than 4 per cent. Hold adds the Times.Despite persistent concern that fashion chain Ted Baker remains vulnerable to its customers "trading down" to mid-range rivals, it continues to perform to plan. It also has cash on its balance sheet and scope to take advantage of cheap US rents to accelerate its expansion: it has 11 stores in America but targets 30 within three years. At 370p, down 5½p, or 13 times earnings, hold on says the Times.About 95% of National Grid's earnings are regulated, with the other 5% - which includes assets such as the company's liquefied natural gas (LNG) terminal on the Isle of Grain in Kent - comprising the remainder. Earning from these unregulated businesses are mostly on long-term contracts. The shares are now trading on a March 2010 earnings multiple of 9.3 and remain a buy for their solid, safe dividend says the Telegraph.Engineer Halma admits trading got tougher in the second half of last year, but cost-cutting measures the company has implemented since should ensure it continues the habit of generating healthy returns. Hold says the Independent.Halma continues to enjoy strong growth in China and India, has plenty of firepower to make bolt-on acquisitions and will benefit from the inexorable spread of tighter safety legislation around the world. However, with profit forecasts nudged lower yesterday and the shares, at 176½p, trading at 12 times earnings, potential investors should favour the safety-first approach. Look to buy lower down adds the Times. Catering and other in-flight services supplier Journey's problem is that the aviation industry upon which it relies resembles a nuclear wasteland. The shares will struggle for the foreseeable future, and as such we cannot think of a compelling reason to buy them. Avoid 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.