LONDON (ShareCast) - Rexam’s high financial gearing remains a concern – it has net debt of £1.9 billion against a stock market value of £2.5 billion – although the company remains comfortably within its borrowing covenants.

So, too, is the prospect that it will overpay in any bidding war for the beverage can business of Anheuser-Busch, which InBev is expected to sell if its bid for the US brewer succeeds. However, at 380½p, or ten times current-year earnings, and yielding nearly 6 per cent, Rexam remains a solid hold, says the Times.

Travis Perkins is well aware of the problems it is facing. In its interim report yesterday, the company spelled out a coherent picture of how to reshape the builders merchant to deal with the downturn. It is reducing its headcount, holding its dividend, cutting the size of its distribution division and reducing debt. The Telegraph believes that Travis is well managed and is doing the right things given the state of the market. On a long-term horizon, hold.

Adverse market movements have reduced Aviva’s surplus capital from £2.9 billion to £1.8 billion over the past six months. However, stock markets would have to fall a further 40 per cent before it would have to contemplate raising fresh capital or cutting that dividend. On a prospective yield of 7.3 per cent at 507½p, the payout is attractive in itself. Poor sentiment on insurers – little better than on banks – is unlikely to lift swiftly. Even so, the Times says hold.

Telecity chief executive Michael Tobin reckons that there is a lot more to come from the shares: as group revenues continue to soar (up 34 per cent in the first half of the year) against a largely fixed cost base, so the stock will rise, he argues. Investors should be assured that barring unexpectedly bad news, they are likely to do very nicely out of Telecity. Buy, says the Independent.

Provident Financial is well funded with £380 million in undrawn and committed funding facilities through to March 2010: enough to grow its loan book by more than a third. Those attractions saw the shares rise 9 per cent to 894½p, or 13 times earnings and yielding a secure 7.1 per cent. Buy on weakness, according to the Times.

The watchers like Renold. Those at Kaupthing, who say that Renold suffers from having a small market capitalisation, reckon that even without any organic growth, the company comes at a 50 per cent discount to the market. That said, the watchers have a price target of 94p and given that the shares traded at just less than 90p in mid-June, the target does not offer buyers that much uplift. Hold for now, says the Independent.


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