The problem for investors in distributor Premier Farnell is that while they have done well in recent history, the market may be turning against the group.
The stock is expensive, but punters may decide that a company that has grown 2.2% in the UK, where the rest of the market has shrunk by 4%, is worth holding on to. Cautious hold says the Independent.
Premier is better insulated from the economic cycle than before, it is by no means immune. A strengthening dollar helps, as does Premier’s steady repurchase of its preference shares. But at 176p, or 12 times current-year earnings, and yielding 5%, the shares can be no more than a hold adds the Times.
Galliford Try builds wind farms and flood defences, and maintains schools and hospitals, but it is housebuilding that remains its biggest activity. Profits are forecast to head backwards over the next two years, while Galliford’s scope to keep selling houses at current rates may be hurt by heavier discounting by its bigger rivals. Neither at 62p, or nine times current-year earnings, nor yielding 4.8%, is the valuation especially compelling. Avoid says the Times.
Accountancy services group Tenon recent progress may be difficult to sustain as the economy slows, as will Tenon’s so-far resilient sales of personal financial services. The counterweight is provided by the recent growth through acquisition of its corporate recovery practice – where revenues are running at £40m. On eight times this year’s earnings, buy on weakness says the Times.
Analysts hoping to upgrade supermarket group Wm Morrison's profit forecasts ahead of the results were instead left grumbling over a lower-than-expected depreciation charge that helped boost the pre-tax figure. It is a little unfair. Morrison has not pulled any nasty surprises out of its shopping bag, and has delivered sales figures most grocers would envy. Add to that a huge freehold property base and the shares look good value, trading in line with the sector on an estimated price/earnings ratio of about 12 for 2009, says the FT.
Morrisons results were better than expected, though it warned of an increasingly tough trading environment and analysts held back from upgrading full-year forecasts. But with some still expecting to upgrade in coming months and the support of the share buy-back programme - Morrisons remains a buy says the Telegraph.
Home Retail has good management and a decent balance sheet - but not enough to escape the gloom. Yesterday's news did not amount to a profit warning but it felt like one as the first quarter's better-than-expected sales performance was reversed. The forward price/earnings multiple of less than 8, a discount to the general retail sector, is a fair valuation given the inflationary pressure next year and a dearth of defensive characteristics, says the FT.
The outlook for the economy is about as clear as mud right now. In such circumstances it would be crazy to recommend that readers buy shares in a retailer that is seeing sales fall and whose fortunes are closely linked to the housing market. Sell Home Retail says the Telegraph.
The reality for banana distributor Fyffes and bigger peers like Chiquita Brands has been far from rosy. Chairman David McCann was anything but upbeat yesterday, describing the hardships of an industry struggling to cope with higher fruit, fuel and fertilizer costs. Lower oil prices and softening food inflation heading into the New Year will help but for the time being there is too much uncertainty surrounding the company. This is one banana skin that investors can avoid. Sell says the Telegraph.
Retailer Dunelm, which specialises in out-of-town stores, issued a strong set of numbers yesterday, saying that full-year profits were up 20% to £49.1m. But it says the market is very challenging and after recent impressive gains, the shares are likely to have a period of inertia. Hold says the Independent.
Analysts suggest mobile email group Synchronica's deal with Russian mobile network operator MTS could be worth $2m, which will hep it meet its £3.8m annual revenue target. House broker FinnCap has an 8.75p price target for the next 12 months. Buy says the Independent.
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