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Sun Jan 13, 2013 6:29 pm Reply with quote
Tempus: Martin Waller says the new 'Orb' market for retail bonds, launched two years by the London Stock Exchange, has not proved the runaway success hoped for at the time, with investors now showing more caution towards such investments.
The Daily Mail
Investment Extra: Dan Hyde says some market experts are bullish about prospects for equities this year, with professional investors suggesting stocks such as Howden Joinery Group, United Drug and Dragon Oil are worth watching.
The Sunday Times
Inside the City: Danny Fortson expects more takeover action among iron ore producers following the recent rally in prices, with Zanaga Iron Ore a potential punt for speculative investors.
The Sunday Telegraph
Questor: Garry White says buy Anglo American, £20.02, as a series of changes over the next few months (including the appointment of a new CEO) could 'unlock significant value over the long-term'.
Buy Rolls-Royce, 918p, as the squeeze on military spending will be outweighed by the 'boom in civil aviation'.
The Mail on Sunday
Midas: Joanne Hart offers three tips for 2013 that should offer 'superior returns' for investors: Fastnet Oil & Gas, 22p, Segro, 251p, and Avacta Group, 1p.
The Investors Chronicle
Tips of the Year 2013: Buy Compass at 740p; the top pick for long-term growth given its ability to generate cash.
Buy Henry Boot at 137p; best value play for its 'significant land bank'.
Buy Vodafone at 158p; best income play with an impressive dividend track record.
Buy Imperial Tobacco at £23.96; the 'old reliable' stock of the year, bolstered by its excellent dividend stream.
Buy Energias De Portugal at Eu2.35; international stock of the year, especially for 'adventurous income seekers'.
Buy First Property at 20p; best Aim play for dividends and 'decent growth prospects'.
Buy Invensys at 335p; 'most likely takeover target'in 2013 following the sale of its rail division.
Buy KEFI Minerals at 3p; the 'standout choice' for 'blue-sky tip of the year'.
Review of 2012 Tips of the Year: Keep buying AZ Electronics, Beazley, BG Group and Procter & Gamble; hold Hammerson, James Halstead and Smiths News; but sell PowerHouse Energy.
News Tips: Keep buying Greka Drilling, 14p, given the rally on the back of two new deals.
Take some profits from Central Asia Metals but hold the rest at 142p.
Feature Tips: Simon Thompson reviews his 2012 portfolio of bargain shares, advising investors to 'run their profits' on Telford Homes, MJ Gleeson, Molins and Noble Investments.
Results Tip: Sell Carnival, £24.40.
Stock Screen Tips: Five stocks with potential based on brokers' upgrades are Ashtead, CSR, EasyJet, Aberdeen Asset Management and Anite.
Trading Tips - Kazakhmys: Ragu Dharmaratnam of Baselica sees a possible shorting opportunity if the price breaks back below 750p.
Silver: Dharmaratnam also thinks a recovery in the silver price looks likely after the sharp fall in December.
Xcite Energy: Zak Mir at www.zaks-ta.com
sees momentum for a further break on the upside.
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Sun Jan 13, 2013 6:54 pm Reply with quote
MP Evans 485p
Questor says BUY
MP Evans runs palm oil plantations in Indonesia. Palm oil prices have been falling but cannot keep going down for long. Crude palm oil futures are currently quoting below $800 a tonne, compared with $950 a tonne in August because of record inventories in Malaysia.
Prices are likely to be supported by fears of tightening vegetable oil markets. Soybean planting looks as if it could be delayed because of excessive rain in Argentina and palm oil is already looking relatively cheap compared with oil from soybeans.
The continuing US drought has also raised questions over 2013 production of soybeans. This commodity was Morgan Stanley’s second pick in its performance predictions for 2013, with only gold seen as outperforming. This should boost demand for palm oil as a cheaper alternative.
Evans expects to have produced 300,000 tonnes in 2012, rising to 500,000 tonnes by 2015, as its plants mature.
Evans also has a stake in an Australian cattle breeding operation, owning a significant amount of land.
The 2013 earnings multiple is 12.1, falling to 11.8, and the prospective yield is 1.3pc.
London Mining 145p
Questor says BUY
London Mining produces iron ore from its Marampa mine in Sierra Leone and is developing two other iron ore mines in Saudi Arabia and Greenland. The company also has a coking coal operation in Colombia, so all of its output focuses on the feedstocks for steel.
Iron ore prices are rallying sharply after hitting a three-year low in September and the price of London Mining has not rallied in step. China received 65pc of all global iron ore shipments and concerns about a slowdown dampened prices earlier in the year. However, Credit Suisse expected China’s steel output will rise 6pc this year.
Management have recently been wading in to buy shares. In mid-December Graeme Hossie, its chief executive spent almost £185,000 buying 150,000 shares, Dr Colin Knight, its chairman, spent £40,000 buying 35,000 shares and Sir Nicholas Bonsor, deputy chairman, spent £20,000 buying 15,300 shares.
The company has a 2012 production target of 1.5m tonnes of iron ore but plans to expand annual output to 5m tonnes equivalent later this year. A second plant is expected to be completed in the next few months increasing annual capacity to about 3.6m tonnes.
Currently unprofitable, the company is expected to post its first profits in 2013 and is on an earnings multiple of 4 falling to just 2.8 in 2013.
Heritage Oil 190.3p
Questor says BUY
Heritage Oil has gone through a transformation this year. It has exited from Kurdistan, where progress on the country’s first oil industry legislation has been slow and where it would have faced expensive exploration and developments obligations. Its focus has now moved to Nigeria, where it will soon have production from its purchase of the OML 30 licence from Shell.
On Monday, Heritage’s Nigerian partner in OML 30, Shoreline Power Company, exercised its option to buy 30pc of the joint venture. Heritage should get $100m (£61.5m) this month.
OML 30 produced 35,704 barrels of oil equivalent per day (boepd) in November with 15,665 barrels net for Heritage. This gave revenues of $52m for the month.
Heritage also assets also in Russia and Malta. It is one-third owned by its chief executive, Tony Buckingham.
The current year earnings multiple is 13.4 falling to 6.4 in 2014. This could be a transformational year for Heritage.
Melrose Ind. 226.3p
Questor says BUY
Melrose Industries was punished after it issued a conservative outlook in November. This looks like an overreaction and the shares have partially recovered since then. Melrose is a turnaround group that employs a private equity-like model to buy underperforming industrial companies.
The last one it bought was German group Elster, which makes smart meters. Management have an impressive track record and analysts commented that the funding of Elster was conservative. However, net debt stands at £306.5m following the deal.
Trading on a 2013 multiple of 13.2, the yield is 3.4pc. The shares are a continuing recovery play.
Questor says BUY
Austerity means outsourcing – and Capita is likely to benefit as a result.
The country’s largest outsourcing group is likely to return to organic growth of about 3pc when it announces its 2012 results but 2013 should be even better. Like-for-like growth could be as strong as 6pc. This represents a strong turnaround from 2011 when organic growth fell by 7pc.
In 2012 margins are likely to be 45 basis points lower but the fall is due to additional costs associated with acquisitions and the start-up of new contracts. The fall is a sign the group has won contracts and is bedding in new business It is not a “structural” problem that investors should be concerned about.
There is a pipeline of bids worth £3.1bn over the next six months and any wins would lead to upgrades.
The shares are trading on a 2013 earnings multiple of 13.5 compared with its previous 16 when in a growth phase.
San Leon Energy 8.9p
Questor says BUY
Probably the most speculative of all the 2013 tips, £100m capitalised group San Leon Energy is currently in the process of merging with £50m Aurelian Oil and Gas in an all-share deal.
Both companies are involved in shale gas exploration and their combination means San Leon will hold the largest amount of exploration acreage in Poland, where shale gas prospects look good. It has assets across Europe and North Africa.
Aurelian had €51.4m (£42m) on its balance sheet at its last interim results, so the merger brings in cash to fund the explorations programme.
Successful drilling could lead to a significant re-rating for the shares. However, the group is likely to be loss-making for many years and investors must consider this as a relatively risky investment.
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Sun Jan 13, 2013 7:05 pm Reply with quote
Sunday Telegraph Business Editor
G4S 257.2P (closing price on Fri Dec 28)
When a fundamentally good business has a jolt to the system, the market can sometimes overreact.
I believe this is the case with G4S, which has had a shocker of a year, the result of biting off more than it could chew with the Olympics. Coming after the failed bid to buy ISS, the company is certainly flirting with the last-chance saloon.
When G4S announced it could not fulfil the contract to provide security staff for the Games, the company’s share price slumped to 240p from 290p.
But beneath the hullabaloo, strong fundamentals remain for G4S in the ever-growing outsourcing market.
Nick Buckles, the CEO, is a company lifer and investors rightly like what he has done to the business historically – pushing strongly into emerging markets (which now account for 33pc of revenues) from which most of the company’s growth (9pc to 10pc per annum) comes.
Revenues should climb to £8.6bn in 2014 from £7.5bn in 2011 as new contracts mature, and net debt should fall. As long as Buckles sticks to a “steady-as-she-goes” plan, G4S should have a strong 2013.
Chief Business Correspondent
Along with bank bashing, the art of valuing Britain’s lenders has become an equally competitive national sport.
What’s the cost of ring-fencing? Will there be even tougher capital requirements? Is eurozone debt all that toxic anymore? And who can understand bank accounts anyway?
The problems have meant banks are unloved by investors as well as politicians and the public. But Barclays is “over-hated”.
On regulation, we have clarity for the first time in ages: banks will be ring-fenced, not split up. The arrival of Mark Carney at the Bank of England is seen as a positive: he apparently doesn’t share Sir Mervyn King’s zeal for high capital ratios.
On fines, Barclays has had an awful year, but at least it’s already paid for Libor. And the new management is determined to get back to banking.
With regulatory clarity and economic recovery, banks should pick up strongly in 2013. Trading at a whopping discount both to the rest of the sector (around 25pc) and to its book value of £3.60, Barclays is still attractive.
BG Group £10.08
Anyone who bought into BG Group a year ago may be licking their wounds this Christmas.
Having started 2012 close to the £14 mark, and risen as high as £15.47, the company’s shares are now only narrowly above £10 - a threshold it last crossed way back in May 2010.
The slump followed BG’s Hallowe’en horror of an announcement that it expected no oil and gas production growth whatsoever in 2013, against market expectations of more than 10pc.
But BG’s production warning related mostly to deferred projects, rather than production that would never materialise.
The severity of the share price fall reflected the bursting of a previously-unshakeable bubble of confidence in BG’s management.
The task of rebuilding its reputation will be in the hands of Chris Finlayson, who takes over from longstanding chief executive Sir Frank Chapman on January 1.
BG Group now looks cheap given the underlying strength of its oil and gas assets in places like Brazil, Australia and Tanzania.
Finlayson needs to convince investors he can deliver on their potential - and if he does so, the share price should recover.
If he cannot, it is hard to see BG falling much further without one of the perennial bid rumours finally coming true.
Sunday Telegraph Deputy Business Editor
When easyJet first took to the skies in 1995, it was with bright orange planes, Stelios Haji-Ioannou and grumbling customers week after week.
Seventeen years on, and the orange planes and Stelios (albeit now with a knighthood) are still on the scene but the grumbling customers are less of a fixed item.
The easyJet of today is a very different beast to the challenger airline of yesteryear.
Its dominance across Europe continues apace and, with the ability now to reserve specific seats, its appeal to business travellers is increasing.
With Carolyn McCall at the helm for the past two years, easyJet’s shares have increased significantly to put it within a hair’s breadth of breaking into the FTSE100 at the next reshuffle in March.
Were that to happen, index tracker funds will be forced to pile in, propelling it only further. A solid buy.
This tip comes with a major health warning – this is a high-risk move.
But with that in mind, I pick Bumi, the FTSE 250 coal mining group, which has become one of the biggest corporate problems to hit London’s quoted markets.
Those shareholders who bought in at its 2011 float, lured by the name of Nat Rothschild, have seen the shares plummet as major governance issues unfolded.
The mud is still flying, with an inquiry into financial irregularities at the Indonesian operations, allegations of hacking, the Takeover Panel now investigating a concert party between shareholders and warring investors launching rival bids for the company.
However, new CEO Nick Von Schirnding is leading the board’s plan to cut ties with controversial Indonesian shareholders, the Bakries, and get the business back to being a boring coal miner.
Once – or if – Bumi waves goodbye to the Bakries, the shares should enjoy an immediate uplift. What should remain are impressive Indonesian coal mining operations that are well placed to feature in China’s growth story.
Greggs claimed a famous victory in 2012 when it forced George Osborne into an about-turn over his “pasty tax”.
However, life on the stock market appears to have been more challenging than convincing the Chancellor to rip up his financial plans.
Greggs shares have fallen 9pc this year and are down 17pc from their peak of £5.58 in April.
The icing on top of the 2012 Greggs cupcake was delivered in December, when respected chief executive Ken McMeikan revealed he is stepping down from the Newcastle-based bakery chain.
A replacement for Mr McMeikan is yet to be named, but this opens an opportunity for investors.
Greggs is well-placed to take advantage of the continuing economic malaise in 2013 and also has plans to expand through coffee shops, wholesale and new locations such as railway stations.
Although sales have slowed this year – in part due to bad weather – Greggs has demonstrated in the past that it is a resilient business and has increased its dividend every year since it floated in 1984.
In the not so distant past, ITV looked like a basket case that would be impossible to turn around but, over the past three years, chief executive Adam Crozier has done a solid job of righting the ship, by cutting costs, dealing with its messy pension deficit and setting out a clear strategy to increase the size of its studio business.
The former Royal Mail CEO ended 2012 by making good on his promise to increase the production base in the US, acquiring a majority stake in Gurney, the American television production business.
Next year, this and other strategic acquisitions made over the course of 2012 should start to bear fruit.
As with any creative business, there is no hard and fast guarantee that they will deliver the hits, such as Downton Abbey, which stars Michelle Dockery (pictured above), ITV needs, but Mr Crozier must be credited for taking the right steps.
Its share price rose 59pc to 102p over the past year, despite structural decline in the media industry and the economic downturn.
According to Panmure analyst Alex De Groote, it has been one of the best performers in the past two decades.
Thomas Cook 47p
Not even Harriet Green, the upbeat new chief executive of Thomas Cook, could deny that 2012 was an annus horribilis for the 171-year-old tour operator.
The past 12 months have seen the company slump to a £485.3m loss, lay off 1,250 staff, agree a £1.4bn financing package on pretty punishing terms and part with a number of assets.
While 2013 is unlikely to be an “annus mirabilis”, there is recognition that the tour operator is now over the worst and some parts of the City believe Thomas Cook represents a buying opportunity.
Green has identified £100m of costs that can be stripped out and more savings are expected early next year, potentially in the form of job cuts, shop closures and a further downsizing of the aircraft fleet.
Debt, at £788m, is too high and it is expected Thomas Cook will have to raise £300m to £400m to ease its balance sheet.
However, even after an equity-raising, analysts believe the shares, which have added 31p over the past 12 months, have potential. Credit Suisse estimates that post a £300m rights issue, Thomas Cook would trade on a multiple of 4.9 times.
Secure Trust Bank £14.70
Just over 12 months on from its stock market debut, Secure Trust Bank has recorded the sort of increase in its share price that many of its larger rivals would dream of.
Secure Trust is the sort of bank regulators would love more of, with its conservative approach to risk and old-fashioned banking ethos.
Under chief executive Paul Lynam, a former senior manager at Royal Bank of Scotland, the business has grown through a series of small, but value accretive acquisitions and steady organic growth.
The next year is likely to see more of the same, though a repeat of this year’s approximate 75pc rise in the share price is perhaps ambitious.
With the Government keen to encourage challenger banks, the future is looking good for Secure Trust with new regulation likely increasingly to favour smaller institutions.
If you are going to buy a bank, this is the one.
Premier Oil 334.3p
Shares in FTSE 250 explorer and producer Premier Oil plunged in 2012 after a series of dry wells and delays to new projects.
They are now sitting at an 18-month low. However, cashflow is expected to rise substantially over the next few years.
For 2012, production is expected to be in the order of 58,000 barrels of oil equivalent per day (boepd) rising to between 65,000 and 70,000 boepd in 2013.
First production from its Huntington and Rochelle fields is due onstream in the next three months, so cashflow is expected to leap to between $1.1bn and $1.2bn from around $800,000 in 2012.
The company has operations all over the world. In 2013, Premier plans to drill about 14 wells. The main catalyst for the shares will be success in this programme after its previous drilling disappointments and evidence of increasing cashflow as the year progresses.
Net debt is currently $1.1bn and the group has undrawn facilities of a similar amount. The 2013 forward-earning multiple is just 6.1, falling to 5.5 in 2014.
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Sun Jan 13, 2013 7:09 pm Reply with quote
The banking industry is showing some signs of life, and Barclays could be set for an interesting year. Challenges certainly remain, including further regulatory issues and fines (US investigations into financial probity and interest rate swaps), higher capital requirements, and pressure from shareholders for greater return on capital (the dividend yield is paltry compared to historic standards).
Barclays' decision to hold its hands up first over the LIBOR scandal could prove financially prudent, as it led to a discounted fine. The company has a broad mix of products and is geographically diversified (describing itself as having a 'universal banking model') and in February is expected to announce a restructure of its operations - with particular regard to the investment banking and retail banking businesses.
2013 could be a seminal year for Barclays and, whilst the obstacles are many, there are signs this is a company on the mend. The market consensus now stands at a cautious buy and the share price has managed to gain 60% over the last 12 months (compared to an 8% rise for the FTSE 100), albeit from a low base.
Although a UK company, Standard Chartered derives around 90% of its income and profits from Asia, Africa and the Middle East. December's trading statement confirmed the company was firmly back on track after August's $327m fine from the New York regulator relating to transactions with Iran.
Standard is a rare example of a bank in hiring mode, particularly in China and Africa where it anticipates further growth. Despite the US fine, December's update also highlighted improved financial features, including revenues, lower loan impairments, general asset quality and strength in liquidity and capital. Over the last six months the shares have staged a quiet yet robust recovery, having risen 15% as compared to a 6.8% gain for the FTSE 100. This return to business as usual is reflected in a strengthening market consensus, now a buy.
Although its brewing and pub heritage is a distant memory, Whitbread has not only become the UK's largest hotel and restaurant company, but it is also aggressively expanding its international presence.
Costa Coffee has grown to one of the largest coffee house chains in the world, and the largest in the UK. In its latest quarterly update the board reiterated its five-year growth plans (to 2015/16) to increase the number of Premier Inn UK rooms to at least 65,000, add 80-100 new restaurants and nearly double Costa Coffee sales of £1.3 billion from 3,500 stores worldwide. In spite of fierce competition, the group is on track to meet analyst expectations of strong full year results. The shares have risen 67% over the last year, but I believe there is no sign of investor appetite waning. The analyst consensus is that the shares are still a buy.
McDonald's is one of the top ten recognised global brands and is the world's largest fast food chain. The weak global economy, a strong US dollar and the euro zone crisis weighed on the group's latest results, which showed revenues and profits flat ($7.2bn and $1.46bn respectively). Nevertheless, global sales grew 1.9%, and in Europe, where around 40% of its business is undertaken, revenues were up 1.8%. More importantly, McDonald's has consistently outperformed competitors since the recession, notwithstanding newer chains including Panera Bread Co entering an already competitive market. The company offers a stable balance sheet, a diverse global business with a progressive dividend policy and share repurchase programme. I believe the market consensus of a buy will remain for the time being.
ITV's mid-November trading update was well received, and the five-year transformation plan established in 2010 remains on track. A more balanced and robust business model is the goal, with a drive to increase non-advertising revenues being led by a renaissance at the group's Studios business. Its Studios production arm saw revenues rise by 20%, although this included strong growth in the first half, with international sales of shows including 'Come Dine With Me' and 'Downton Abbey' playing an important part.
Cost-cutting initiatives were ahead of target, whilst competition from rivals airing Olympic events will not repeat itself in 2013, possibly allowing a move into positive territory for group advertising revenues. In all, in the changing world of the media industry, content remains triumphant above distribution, an area where the group is growing in strength. Management is highly regarded, whilst an eventual takeover of the company cannot be completely ruled out. In all, analyst consensus opinion remains favourable in tone, a cautious buy.
2012 was not a year for G4S to remember. It booked a £50 million loss against its much-publicised Olympic difficulties, with the full reputational damage not fully quantifiable. It will lose an existing prison management contract and has not made the shortlist for a number of other prison contracts up for tender.
However, a degree of backtracking by the government appears to have occurred, with three prisons set to remain under public sector control. G4S has recently strengthened its management, hiring Adam Crozier (formerly of ITV and Royal Mail) to the board, whilst the company has at least been shortlisted to run a number of call centres assisting with welfare changes. The group operates in over 125 countries and continues to target growth in emerging markets, which currently generate around 30% of group revenues. This year's difficulties could result in a change in Chief Executive, whilst a dividend yield of over 3% (variable and not guaranteed) remains attractive. In all, analyst opinion currently denotes a buy.
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Sun Jan 13, 2013 7:19 pm Reply with quote
2013 Share Tips from The Guardian
The Guardian's 2012 share tips jumped by an average of 19.6%, with Pace soaring more than 160%.
So what will 2013 bring?
Here are a list of the 2013 share tips from writers at The Guardian:
Julia Finch tips Home Retail Group
Diageo is the choice of Simon Bowers
Simon Goodley says "After more than two years as a public company, this might finally be the time to bet on Betfair"
Jill Treanor thinks that Man Group could recoup their 2012 losses in 2013
Nick Fletcher says Chemring are a seeculative bet.
Nils Pratley tips Ruffer Investment Company to "provide protection in the rainy investment weather that 2013 may bring"
Terry Macalister tips Asos
In 2013 Simon Neville thinks profits at SSE will continue to rise and a dividend of more than 6% will be paid
TalkTalk is the choice of Jullette Garside
Finally, Rupert Neate goes for Herbalife
A Summary of 2013 Share Tips from Shares magazine
The 27th December issue of Shares magazine lead with "Tips for 2013 - Top trades for the next 12 months.
On this page we summarise their 16 shares to follow for 2013.
Mid-Cap and Small-Cap Share Tips For 2013
Fastnet Oil & Gas
St. Mowden Properties
Large Cap Share Tips for 2013
Buy Apple Corp at $518.83
Buy Bluecrest Allblue Fund (GBP) (BABS) at 166.2p
Buy Dignity (DTY) at 1,029p
Buy GKN (GKN) at 226.3p
Buy Polymetal International (POLY) at 1,188p
Buy Reed Elsevier (REL) at 628p
Buy Standard Chartered N=Bank (
2013 Share Tips from MoneyWeek
The 4th January 2013 issue of MoneyWeek magazine leads with " ques for riches - What to buy in 2013"
In the article, MoneyWeek experts list Here's are some of their 2013 share tips:
Secure Trust (STB)
Travis Perkins (TPK)
Reed Elsevier (REL)
Baillie Gifford Trust (BGFD)
While Max King says that he would short Vodafone (VOD)
ere's are The Independent's 10 share tips for 2013 (though we can actually see 11 tips!):
St. James's Place
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DS Smith can pack a punch Alex Brummer: The prospects for 2013 are not looking that bright with the eurozone in recession, Asia slowing and the US struggling with deficit and debt problems. So, once again, it seems sensible to look for reliable, defensive plays.
Diageo, my stock pick the past three years, continued to shine in 2012 rising by nearly 30 per cent in the year to date despite a recent setback in Mexico. For 2013 I have decided to switch horses.
My choice, the paper recycling and packaging group DS Smith, sits not far outside the FTSE 100 and looks deadly dull. And unlike Diageo, with its prestige branded liquors and beer portfolio, it can too easily be overlooked.
Under the guidance of its current chief executive Miles Roberts it has put down an important marker in Europe through the purchase of SCA Packaging. The core business of DS Smith is picking up paper waste from Britain’s supermarket groups and using modern technology and innovation to create corrugated cardboard and other durable products.
Among its recent innovations is a tough printed cardboard material that can safely hold liquids such as mass-market wine boxes. The shares tha
Hopes rise BP will gush again
Ruth Sunderland tip: If BP puts its two biggest uncertainties behind it, the company could have a good year
Ruth Sunderland: MY best tip for 2013 is not a share recommendation, but to pay down your mortgage. It’s risk-free and will save a fortune in compounded interest. But for a flutter on the stock market, perhaps this will be the year that BP, currently at 425.05p, turns itself around after a run of misfortunes.
It will reach a settlement in the US, drawing a line under the Deepwater Horizon disaster, and is also resolving its issues in Russia. If BP puts its two biggest uncertainties behind it, the company could have a good year. (I own a very small number of shares.)
Ocado, my tip for last year, had a roller coaster ride. I tipped it at 54.4p, and at the half-year stage it was looking inspired. The shares fell back from the heady heights to finish yesterday
Stock still tasty at Sainsbury’s
Hugo Duncan: Sainsbury shares were tipped here last year as looking to be good value at 302.9p, and so it proved. The stock enjoyed
Seek out Providence
Geoff Foster: Providence Resources boss Tony O’Reilly Junior and family have invested millions of pounds in the Irish-based oil and gas exploration and production company. He is super-confident we will soon all see an Irish oil boom to match the UK’s jackpot exploitation of the North Sea.
The shares, which touched 725p this year on prospects for its flagship Barryroe field off the coast of Ireland, currently trade at 579p and look dirt cheap.
Broker Liberum Capital has a target price of £22. Studies of the Barryroe field in the Irish Sea suggest it could contain 280million barrels of recoverable oil, which could make it a very material oil field sitting in a benign development environment and favourable fiscal regime.
Liberum believes Barryroe could be worth 1986p alone. Beyond this, the drilling programme in 2013 will test three material prospects, with exploration wells starting in the first quarter on the Dalkey Island and the massive Dunquin prospect and an appraisal well on Spanish Point some time in the third quarter.
United Drug can cure ills
Ben Griffiths: Ireland-based healthcare services firm United Drug has recently shifted its listing from Dublin to London. With its near-£570million market capitalisation, the company was propelled straight into the FTSE 250 index in the last quarterly review.
United Drug has enjoyed a successful 2012 with growth dominated by an increased focus overseas. The shift – fuelled by a raft of recent acquisitions – means 70 per cent of earnings are now derived from outside Ireland. The stock has also gained around a quarter after it was announced that United Drug was moving its listing.
The shares, which hit a 52-week high of 287.25p earlier this month, are trading well above February’s low of 157.75p and are on a price/earnings ratio of 20 times, according to Reuters.
Analysts are hopeful that the trend for bigger pharmaceutical companies to outsource some non-core functions to cut costs will continue to benefit United Drug in 2013.
Among those analysts covering the stock, Jefferies rates it a buy along with Goodbody Stockbrokers, while Peel Hunt cut its rating from buy to hold in November.
Rob Davies: Genel Energy, the oil explorer run by former BP chief Tony Hayward, could be in for a busy year. The group has already established itself in Kurdistan, where its fields contain oil so good that the boys who work on the rigs out there reckon you can run a car on it – for a few metres at least.
After years of squabbling, the semi-autonomous Kurdish government and Baghdad also appear to have reached agreement over export duties. That should leave the way clear for a long-awaited pipeline that will allow Genel to pump its oil into Turkey and beyond.
And this year Genel has also established a bulkhead in Africa, snapping up fields in Somaliland and Morocco, where it hopes to begin drilling in the fourth quarter of 2013.
Genel’s organic growth prospects look good, but there could be a takeover story here too. The company, cash-rich and sitting on some great assets, has made itself very attractive to a supermajor looking to buy into one of its frontier properties.
IQE will chip in big returnsPeter Campbell: You won’t have heard of IQE, but the chances are high that you use its products every day. The group makes a key component of microchips called Gallium ***, which allows chips that contain it to run faster and consume less power
With demand for higher efficiency and faster connections growing, IQE is likely to see its products in strong demand. It also supplies the same material to solar panel manufacturers. Shares are currently at 28.5p, and have risen more than 40 per cent in the last 12 months.
Analysts say it could easily put on another 60 per cent this year – with the potential for even bigger gains if Intel comes along with its chequebook.
RSM to have the last laugh
James Salmon: The crisis-hit audit firm RSM Tenon became a laughing stock after admitting a £12million black hole in its accounts in January. This saw RSM slump to an £84million loss in the second half of last year, with shares falling by a third on the day the blunder was announced. Despite bouncing back they are still down 37 per cent over the year.
The firm lost more than £100million in the year to the end of June. But they do say what doesn’t kill you makes you stronger. RSM was saved from the brink after renegotiating its loans with Lloyds – a move which should tide it over until December 2014.
Former chief executive Andy Raynor and chairman Bob Morton were booted out, with new broom Chris Merry taking the helm. Unfortunately this meant shedding 400 jobs. Some analysts now believe that the company is a fundamentally sound business and that the worst may be over.
In the jargon favoured by those in the investment game, RSM Tenon may be a ‘recovery play’ worth taking.
Make a date with Cupid
Rupert Steiner: Online dating has become accepted, and the highly acquisitive AIM-listed Cupid has all the bases covered with its Uniformdating site, flirt.com and benaughty.com. Since floating at 60p two years ago, shares have grown to 192.5p on the back of the market doubling in size.
Cupid is now in 15 countries spread across Europe, North and South America and Asia Pacific. Chief executive Bill Dobbie is continuing to find new niche partners and Ivor Jones, an analyst at Numis, said the key attractions are it is subscription funded, rather than advertising reliant, and that there is an endlessly replenishing pool of potential customers.
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Fastjet — 3.80p
SIR Stelios Haji-Ioannou helped change the course of aviation history in Europe when he founded his bright orange EASYJET airline empire — and now he has set his sights on doing the same in Africa.
He has joined forces with conglomerate LONRHO and Ed Winter, who helped set up the low-cost airline GO for British Airways, to take the no-frills airline revolution to Tanzania, Ethiopia and beyond with FASTJET.
Fastjet launched at the end of November with a flight from Dar es Salaam in Tanzania — and in true Stelios fashion has hardly been out of the news since, with expansion in South Africa a possibility.
The growth potential is huge with Fastjet’s £13 fares — pre-taxes of course — cheaper than travelling long distances on a coach.
Fasten your seat belt and buy the shares.
Barclays — 262p
BARCLAYS is desperate for a new start after a dire 2012.
The Libor scandal dragged the bank’s reputation through the mud and triggered the ousting of chief exec Bob Diamond as well as chairman Marcus Agius.
Barclays is now under Brit boss Antony Jenkins — and all eyes will be on his strategic review in February which could prove a trigger for the share price.
Analysts expect the new man to slash costs at the investment bank, ditch under-performing businesses across Europe and lift targets in the UK retail bank.
Risks remain, not least the Serious Fraud Office and Financial Services Authority investigations into payments to Qataris that bailed out the bank in 2008.
But even last year the shares rose 50 per cent. Expect another rise in 2013.
Tate & Lyle — 762p
ONCE famed for Golden Syrup, TATE & LYLE is now making its name in speciality products such as zero calorie sweetener Splenda. The company suffered through the credit crisis from the weakness in Europe.
But late last year it unveiled yet another innovation in the form of a sweetener that promises to HALVE calorie levels in fizzy cola drinks without affecting the taste.
It’s the potential of products such as this — and low-salt substitute Soda-Lo — that have analysts chomping at the bit about the company.
Stockbroker INVESTEC slapped an 850p valuation on the business before Christmas.
While it’s unlikely to be the fastest-growing stock of the year, it’s one to stick in the larder for the long term.
Earthport — 17p
EACH year there’s a high-risk bet that could reap dividends. EARTHPORT fits that category this time round.
The company has carved out a niche with a fully automated cross-border payment technology that’s now being used by banks and other clients.
It offers web-based financial services such as trade payments and international fund transfers.
It is hardly known outside the City but is backed by influential institutional investors such as BLACK ROCK and counts IBM, WESTERN UNION and South America’s ITALBANK as customers.
Thomas Cook — 48p
SUN City got its fingers burnt in 2011 when backing THOMAS COOK — only to see disasters push the package holiday giant to the edge of bankruptcy.
But the share price has finally revived under the new chief exec Harriet Green.
She has blitzed the business, axing execs who won’t join her revolution and shifting the focus to the web.
Her turnaround plan will be laid out in full this year and is likely to come with moves to raise cash from institutional investors.
This could hold back the shares for the first few months of the year, but 2013 should cement this company’s revival.
Coastal Energy — 1200p
IN the rollercoaster world of oil and gas exploration, COASTAL ENERGY is attracting interest for its success in South East Asia.
Coastal has a string of assets in the Gulf of Thailand and Malaysia and was a bid target for Indonesia’s state-controlled energy giant PERTAMINA.
The company will have two exploration rigs trying to make new discoveries as well as boosting production at its existing fields to as much as 340,000 barrels of oil a day.
Coastal is based in the US and trades on London’s junior AIM market. It’s a gusher!