Wednesday tips round-up: Wolfson, BG, McBride...

9th Feb 2011 06:57

Wolfson makes semiconductors that go into a range of electronics products, from tablets to Kindles and smartphones such as the Samsung Galaxy. Indeed, the South Korean electronics group is reckoned to be the unidentified single customer that provides a fifth of all revenues.Revenues should be up by more than a third this year and, because of Wolfson's high operational gearing, much of this flows through to profits. But with the shares on 27 times' this year's earnings and 23 times' next year's, one must conclude most of the recovery is already in the share price says the Times.Wolfson continues to launch new designs, with 30 products released last year, and this growth will help to lift revenues. However, the valuation looks quite rich. Panmure's multiple of 28.5 times forecast full-year earnings for Wolfson is some way off the valuation of its larger rival, ARM Holdings, and so too are its opportunities for growth, but only a hold says the Independent. McBride, the maker of own-brand household cleaning and personal care products, had a day to forget. Its interim results were in line with expectations, but the shares tumbled after it issued a warning about rising raw materials prices and a "weak retail environment". In the UK, McBride is likely to face continuing subdued demand and fierce competition but the long-term future is bright, given its impressive client base and expansion opportunities abroad. However, given the challenges, its shares are fully priced at 12.2 forecast earnings, so sell says the Independent. BG yesterday delivered an impressive "proved" reserve replacement ratio of 223%. In other words, BG is finding much more oil and gas than it is pulling out of the ground. Production is also set to increase at a time when the oil majors are struggling to pull off the feat. BG's total reserves and resources increased by 1.7bn barrels of oil equivalent to 16.2bn, representing 69 years of production at 2010 levels. The success of BG's exploration and production operations suggests that that premium is well deserved and the shares can go on from here, not least because it is very hard to see energy prices falling at the moment on the world's markets. Buy says the Independent.Analysts have some difficulty getting a handle on the financials at Inmarsat, but the main metric is the $700m in free cash the company throws off each year. The company is building its Global Xpress high-speed mobile broadband service, with three satellites due for launch by 2014. As the analysts got their heads around the Harbinger sale, Inmarsat's shares began to rise, indication enough that whatever the fine details, they look like a good long-term bet, the Times suggests. Suggestions that broadband group TalkTalk is seeking an exit are described as "grossly unfair". The priority for now is integrating the original TalkTalk business and the two acquisitions AOL and Tiscali, while extracting the business from BT's own network. With the shares on about 12 times' this year's earnings, there seems little other reason to hold says 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.