US Edition Peter Hambro Mining
626½p +28
Questor says BUY
Peter Hambro Mining, the Russia-based miner, is on track to become the UK's largest gold producer, overtaking rival Rangold Resources. Yet, Hambro's shares are trading on about 14 times earnings compared to Rangold's 71 times.
In the past, Hambro's shares have been dragged down by concern over "Russian risk", and overly ambitious production targets.
But, President Barack Obama's successful Kremlin visit, and news yesterday that Hambro's first-half production increased by 54pc, shows those concerns are over played.
"It has lagged behind its international and Russian-listed gold peers perhaps on scepticism over production plans. With these concerns being 'put to bed' through delivery on guidance, we may (finally!) be on the eve of a significant re-rating," an analyst at Liberum Capital said.
The increase in production puts the company on target to produce between 460,000 and 510,000 ounces of gold this year, pushing Africa-focused Rangold into second place with 430,000 ounces.
Hambro will be further boosted in the traditionally stronger second half when a second mill is due to come on stream at its new Pioneer mine in the Amur region near the Chinese border.
The soon-to-be opened Malomir mine expected the produce between 136,000 and 181,000 ounces next year, increasing to 240,000 ounces by 2012.
Encouragingly, the company is confident it can hit these production targets and shift the gold at a good price. It sold 210,000 ounces in the first half – up from 118,800 ounces last time – at a respectable $917 (£555) an ounce.
"If we are producing half a million ounces we would hope to sell half a million ounces," Peter Hambro, chief executive, said battling a bout of suspected swine flu.
Despite feeling unwell on his first day back at work after a summer break, yesterday was a good day for Mr Hambro as the gold price touched a five-week high of £578.
Mr Hambro said gold demand is so high that the US Mint has run out of sheet gold to make American Eagle Gold bullion coins. Hambro also comes with a "free" iron ore business attached following the acquisition of Aricom earlier this year. Analysts say the iron ore business has huge potential as the reserve is situated just 100 miles from steel-hungry China.
The company says between £400m and £1bn needs to be spent on facilities to extract and transport the iron. But there are encouraging signs that a joint-venture with the Chinese could be on the cards.
If all goes well Hambro will be able to spin-out the iron ore business and use the proceeds to return cash to shareholders smarting after the company scrapped its final dividend.
Domino's Pizza
235¼p +15¾p
Questor says Buy
Susan Boyle made a lot of people rich earlier this year. The unlikely star of Britain's Got Talent helped draw in some 19m viewers for the show's final, with a spectacular impact on sales and marketing for official sponsor Domino's Pizza UK & Ireland. Add to that the effect of the recession, with more people staying in than going out to eat, and you can start to make sense of the company's 35pc increase in pre-tax profits over the six months to June.
Then there were the snowstorms at the beginning of the year. With a Herculean effort Domino's managed to get ingredients into their shops and pizzas to the doors of thousands of Britons sheltering from the freak weather.
But these things can be spun whichever way you choose. The good weather at the start of the summer has had the opposite effect on sales. What Domino's has is a fantastic business model and a very strong management team, which manages to perform whatever the circumstances. Chief executive Chris Moore says this is down to a "relentless sticking to the knitting".
Domino's has not changed its formula, he says, while other companies have bulked up their pizzas with different, cheaper ingredients.
The company dominates its field and continues to grow at a rate of knots. Analysts were busy upgrading their forecasts following the announcement and now expect earnings growth of around 20pc this year. As the company gets bigger it gets more advertising power and a greater ability to source ingredients cheaply. Brand recognition drives online sales, which surged 40pc in the first half and now make up a quarter of all UK sales.
Other avenues for growth are new store openings. The group is on track to open 50 more stores this year, and Moore hinted that that figure could be beaten.
Domino's is also focusing on getting the pizzas out of the door quicker. The quicker they get there, the quicker a customer is to reorder, repeats a company spokesman.
Moore remained typically cautious about the second half, citing a strong second half last year that will be tough to beat. But Domino's expects to beat analyst expectations and report pre-tax profits of around £27m for the full year.
Domino's lifted the interim dividend to 3.5p and analysts expect a yield of around 3.2pc this year. The shares are always highly rated and currently trade on around 16 times earnings. That looks cheap considering the quality of the business.