Weekend tips round-up: Imperial Tobacco, HSBC, Rentokil...

7th Nov 2010 10:22

Last week's full-year results from Imperial Tobacco were reassuring, but even cigarette companies are not immune from the recession. The key trend in the results was a move by consumers to rolling tobacco away from cigarettes as people tried to limit expenditure.The shares are trading on a September 2011 earnings multiple of 10.6 times, falling to just 9.7 next year, which is a discount to less-indebted peer BAT, which trades on a December 2010 multiple of 14 times, falling to 12.8 next year. The current-year prospective yield is 4.6%, rising to 5.1% in 2011, which is attractive. Imperial shares remain a buy for income seekers, the Telegraph reports.Banking giant HSBC issued a cautious third-quarter update on Friday, in which it warned of "bumps in the road" in emerging markets and said that the global recovery was "taking longer than previous cycles". However, the group said that third-quarter profit was "well ahead" of the same period last year as bad-loan provisions in the US fell. The shares are trading on a December 2010 multiple of 13.6, falling to 10.8 next year. The shares remain a buy for recovery and increase in dividends over the next few years, the Telegraph reports.In spite of speculation that pest control to courier group Rentokil could be a target for a break-up bid, the shares have retreated by almost a third since April, as investors have grown nervous that top-line improvement will be hard to deliver. The house broker has edged down earnings per share forecasts for the year by about 3% to 8.3p, leaving the shares trading on a prospective multiple of almost 12 times. A significant upward re-rating looks improbable in the short term says the FT.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.