News

Wednesday tips round-up: IG, Redrow, Morse

10 September 2008 06:23:00

The issue for spread bet firm IG is for how long IG can it growing in what remains a bear market for many of the assets on which its clients bet. More certain is IG's scope to keep growing overseas.

Revenues from Singapore, for example, have trebled year on year. In France and Spain it is generating monthly sales of more than £500,000 in each country, from a standing start. IG trades at less than 14 times current-year earnings - near the bottom of the range it has traded since rejoining the stock market three years ago. Hold on says the Times.

On less than four times current-year earnings, and a recently restored dividend providing a prospective yield of 5%, kitchen supplier Galiform appears temptingly cheap. However, that would be to ignore forecast year-end net debt of £60 million and the danger of further downgrades at November's third-quarter trading update. Avoid says the Times.

Abcam might best be considered an Asos for antibodies: a catalogue retailer whose online approach has transformed the profitability of its sector. It now has the world's biggest catalogue of antibodies (some 45,000), whose recent expansion should underpin near-term revenues. But at 22 times earnings, there will be better times to buy suggests the Times.

Vedanta Resources, a group that is not reluctant to spend vast amounts of money to boost production, said yesterday it is restructuring itself. Part of this will include spending $9.8bn (£5.5bn) on projects to increase aluminium production. Aluminium prices have fallen 20 per cent from $3,380.15 a ton in July, but the longer-term prognosis is for a reversal of the recent trend and investors should buy now. Buy says the Independent.

IT group Morse's full -year results were as bad as expected. There are some good things happening, such as a restructuring making the business simpler, but investors should wait for something more substantial. Sell says the Independent.

Somero, a company that makes laser-guided technology that helps to ensure big concrete floors are flat, has seen its shares drop like a bomb following aprofit warning in May. Its technology is patented and a 99%-plus market share suggests investors would be buying a safe company but the profits warning still smarts and that the stock will take some time to recover. Sell says the Independent.

Some analysts are talking of more losses in 2009 for housebuilder Redrow and, with so many adjustments, that is likely. More worrying is that Redrow is expecting to be cash negative for the next six months, in spite of discounting its homes and not committing to more land purchases. With one-sixth of the market value in the hands of short-sellers, and a hedge fund holding a 27% stake, the share price will continue to be volatile. A rally since the start of July provides a possible exit window says the FT.

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