LONDON (ShareCast) - After a run-up from around 170p last month, the TUI shares trade at around 11 times current year earnings, falling to nine times those for 2009. Such ratios are at the bottom of the historic range for the sector but in line with TUI's peers.
Some analysts argue that with the industry's outlook improved since the mergers of the past year, the price is too low - particularly given the £150m synergies that are expected to be wrung from merging the First Choice and TUI operations. The main players, such as TUI and Thomas Cook, will almost certainly use this period to grab market share from smaller rivals which are unable to deal so nimbly with the changing environment, but the Sunday Telegraph’s Questor believes that after such a strong performance in recent weeks, the short-term trend is likely to be downwards. Sell.
Plexus is worth just £51m and trades on a forward earnings multiple of 10 times. That is a discount to the rest of the sector, which the company should close as it grows. For now, however, there is a chance to get in at an attractive valuation. Buy, says the Sunday Telegraph.
Once the darling of the stock market when it floated, Southern Cross has quickly fallen out of favour and its long-term prospects no longer look as rosy as they once did. The stock is now exceptionally cheap, but only the bravest would dare dip their toes in. Avoid, says the Sunday Telegraph.
At 717½p, Capita shares are not cheap. But the company is considered one of the best-managed businesses in its field and outsourcing is likely to be a growth industry over the next few years. Buy, says the Mail on Sunday.
Carr's Milling’s shares are trading at 667½p, a rise of 6% in just a few weeks. This is an impressive performance in any market, but particularly in today's climate. Investors should sell at least half their shares to book a profit, but also keep some as Carr's seems to be riding the crest of a wave, says the Mail on Sunday.
Finally, a round of applause for Stagecoach Theatre Arts, the tiny Aim-listed stock that this year celebrates its 20th anniversary in that business they call "show". There is little liquidity in the shares, which are certainly not for widows or orphans, but they do look good value and even come with a dividend attached. Buy, says the Sunday Telegraph.
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