Wednesday tips round-up: Petra Diamonds, Diageo, Close Brothers
Wed 26 Sep 2012
LONDON (SHARECAST) - In the Telegraph, Questor continues to bat for long time favourite, Petra Diamonds. The company has been hit hard by this year’s 20% drop in diamond prices and technical problems at its Finsch mine. Petra also has a lot of money to raise to pay for expansion projects. On the plus side, demand for diamonds appears to be increasing and once Petra has got all its capital expenditure over and done with it ought to be able to generate significant profits. There is also the fact that new diamond discoveries are very rare indeed. Trading on about 15 times this years earnings but falling to 10 times by 2014, Petra is a buy.
Lex in the Financial Times likes drink giant Diageo's move for Indian outfit United Spirits. It gets a platform to sell its own premium branded products like Smirnoff through a battle hardened network well used to navigating the complex state structure of Indian commerce. Diageo may also be help improve United’s profit margin, if a deal can be agreed. Talks are ongoing, but United’s major shareholder needs cash.
In the Times, Tempus thinks there is some sense in Close Brothers, the investment bank, focusing on its asset management arm, especially if private clients begin to put their toes back in the market. Its broking and core banking operations are also doing quite well but Tempus thinks the time to buy Close Brothers will be when securities show further progress.
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