Friday tips round-up: DS Smith, BAE Systems, Rangers FC ....
Fri 12 Oct 2012
LONDON (SHARECAST) - Tempus in the Times writes that cardboard box maker DS Smith has been transformed by its recent acquisition of Swedish rival Svenska Cellulosa Aktiebolaget (SCA). Yesterday it gave a positive update on the first 100 days since the deal. Expected annual savings have been raised to 100m euros within three years. However, it is exposed to a contracting European economy. This could provide opportunities to pick up weaker rivals but even if the SCA deal has been successful to date, others may not be. Hold.
James Moore in the Independent wonders whether Indy readers will cancel their subscription when they see he is recommending buying shares in BAE Systems, the defence firm which has just seen its proposed merger with Airbus owner EADS collapse. He explains that it is a "speculative buy", with a high level of risk attached, and certainly not one for ethical investors. However, BAE is actually very cheap, Moore claims. It trades on just 8 times this year's forecast earnings, while yielding a chunky 6 per cent. That yield is more than two times covered by earnings, so is not at any risk just yet.
Questor in the Telegraph says to avoid Rangers' coming flotation. The company, which went into administration owing about £134m to creditors, was bought by a consortium led by businessman Charles Green and now plans to raise up to £20m by listing 50% to 60% of its shares on the London Stock Exchange. It says that football clubs are typically poor investments and struggle to make profits and pay dividends.
Tempus reckons that Ashmore, the emerging markets investment manager, which only fell out of the FTSE 100 four weeks ago, could soon jump back in. Yesterday it gave a positive trading update covering the quarter to the end of last month, as assets under management rose by 6.8% to $68bn. The shares, at 328p when it was evicted, have recovered strongly, so much of the optimism is priced in. For those who like emerging market proxies, buy on weakness.