LONDON (ShareCast) - Rexam had a pretty disastrous 2007 by its own steady-as-she-goes standards when strikes at its US plants and its unhedged position against surging aluminium prices in Europe led to a 27% drop in earnings.
However the market for cans, which makes up about 70% of the group's sales, is stable. Yesterday's first-quarter results suggest a much happier time. The company has renegotiated contracts in Europe, enabling it to pass on the cost of the aluminium to its customers, as it does already in the US. Buy says the Independent.
National Express, one of the UK's top transport groups, informed investors yesterday that things are ticking along just fine thus far this year. Any worries about being hit by a UK slowdown are also tempered by the company's growing international operations. The shares have shed 30% since October amid worries about the economy and the soaring price of petrol. The company now trades at a discount to the sector despite solid prospects. Buy says the Independent.
National Express remains the cheapest stock in its sector. That is odd given the company has pledged to raise its dividend, which currently provides a yield of 4.5%, by 10% in each of the next three years. Tuck away for the long term says the Times.
Sterling Energy aims to sell its operations in America and focus on Kurdish northern Iraq, Madagascar and Gabon. For investors willing for a white-knuckled ride in the next couple of years, Sterling Energy might just be the group as there may be 2bn barrels of oil in its Kurdish fields. Hold for now says the Independent.
Idox could soon be the only pure-play provider of local government software left on the stock market. Idox's growth alone should make it attractive: orders are ahead of last year, margins are a healthy 14%, earnings are forecast to increase 24%. Last month it won a £2.3m contract to provide software to the Scottish Government. At 11p, or six times current-year earnings, Idox is worth a punt says the Times.
Investors have arguably been too kind recently to the FTSE 250 asset management company Henderson, the parent group of Henderson Global Investors. Investors already appear to be pricing in a return to health for the markets, but with the run of troubling economic news showing no sign of abating, the Telegraph believes the downside risk is strong. Sell.
Bathrooms and kitchens group Galiform is a good little company with a strong and loyal customer base. However, the Telegraph would not buy the shares until we have more certainty over the housing market and the general economic climate. Hold.
Sausage skin maker Devro's shares have fallen heavily this year on concerns about the food sector being hit by rising costs and consumers tightening their belts in this current environment. The trading update yesterday should help reassure that bangers and mash are still in demand. Hold says the Telegraph.
The terse one-line statement from British Airways that it is “exploring opportunities” with American Airlines and Continental is confirmation of just how worried the three are by rising oil prices. With some £5.7bn of combined North Atlantic revenues and massive operational gearing, modest improvements in margins would have an pronounced effect on profitability - hence the merger's allure. As it is, at 243p, or 11 times next year's earnings, BA is best avoided for now says the Times.
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