LONDON (ShareCast) - Bus and train group Go-Ahead trades on a price/earnings ratio for the year of about 9.5 times, slightly lagging behind peers.
Given it has addressed worries about fuel price hedging, the discount could narrow. The happy coincidence for rail and bus companies of road congestion and high petrol prices will also ensure a steady stream of custom, writes the FT.
The one big uncertainty is whether Go-Ahead can retain its Southern rail franchise, from which it makes an estimated £30m a year. On a forward multiple of 10 times, yielding 4.6%, stay aboard for recovery. Buy says the Telegraph.
Investors should buy Go-Ahead now, before the stock gains momentum. The group's bus business is strong, and none of the company's train franchises are up for renewal for at least a year. Buy says the Independent.
Mulberry, the retailer of luxury handbags, wallets and other accessories reported an impressive set of preliminary results yesterday, with revenues up 14%. The shares trade on a prospective earnings multiple of a little under 19 times, which is clearly far higher than the average UK retailer, but is reasonable when compared with other luxury brands. Hold on says the Telegraph.
AIM-listed Accys Technologies owns the rights to a chemical treatment that gives fast-growing softwood the strength and durability of tropical hardwood. Accsys is making steady progress: it has secured licences in China and the Middle East, and made a maiden €7m profit, but Accsys’s principal end-market – construction – is faltering just as its methods gain wider acceptance. There will be better times to buy says the Times.
Norcros’s prospects have fallen sharply since last summer, and are getting still worse: spending on showers and tiles is closely linked to refurbishment activity, while its South Arican arm is struggling. At 25½p, or four times current-year earnings, a 13% dividend yield is the sole attraction. But that is insufficient reason to buy says the Times.
The problem for Cadbury investors is that, notwithstanding the momentum behind both sales and profits, the share price is assuming a takeover that may not emerge. Cadbury, though, may embark on the acquisition trail itself. There is also the risk that raw material price rises, particularly that of cocoa, will outstrip expectations in the second half of this year. At 628p, Cadbury can be no more than a hold says the Times.
Like other food companies, Cadbury faces a challenging year as agricultural raw materials and oil prices keep rising. With its share price trading at 21.5 times expected 2008 earnings, Cadbury is more expensive than other food companies. This is reasonable, as long as it delivers on those more detailed forecasts says the FT.
The problem for Cadbury is that there does not seem to be a lot of juice left in the shares. While the company is in rude health, that is already priced into the stock. With commodity costs rising, by about £100m this year, now is not the time to buy. Hold says the Telegraph.
Sub-prime lender Cattles says it is well supported by its banks, and that its bespoke scoring system ensures that its clients are in a position to meet repayments. The problem is that the market will not favour a group that is exposed to the lower echelons of consumer lending, especially in the current market. Hold says the Independent.
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