| CATEGORY: TIPS ROUND-UP SECTOR: NONLIFE INSURANCE |
Tuesday tips round-up: Admiral, BHP Billiton, Lookers |
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Tue 22 Mar 2005
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LONDON (SHARECAST) - Admiral is looking in better shape than its rivals since its flotation six months ago, says The Independent.
The motor insurance company released its results yesterday, with turnover up 28%, customers up 29% while core profits increased by 30%.
The paper wonders whether Admiral's performance can be sustained, with motor insurance premiums 2-4% lower than 12 months ago, and the cost of meeting claims for accidents rising.
The insurance market may be tougher in the next two years but chief executive Henry Engelhardt feels Admiral can raise rates on its specialist lines to counter the downturn. He also said premium reductions will not be as bad this time as in previous cycles.
The paper rates Admiral as a buy because it feels it has lower costs than rivals and a solid strategy. However, the Telegraph's Questor column feels the stock is too pricey to buy right now.
The good times aren't over yet for BHP Billiton says the Telegraph, especially with the group now poised to add uranium to its stable of commodities with the acquisition of WMC.
BHP may be an expensive stock, trading on 17 times earnings with an estimated yield of 1.6%, but is worth it. Buy.
Lookers, which owns 100 car dealerships, reckons its focus on after-sales support, such as servicing, repairs and the sale of parts, will insulate it against slowing sales. Its recently acquired car parts business and sizeable used car business should also help.
But trading could get harder from here says the Telegraph, despite Lookers' confidence, and on a forward multiple of nine times earnings, and yield of just under 4% it would be unwise to get too heavily exposed to the stock. Income investors chould consider holding a few of the shares.
Bob the Builder, Thomas the Tank engine and Barney owner HIT Entertainment is going through a profit-depressing soft patch caused by a temporary interruption to broadcasts in the US, says the Times.
The dividend is covered ten times by earnings and the cash-generative enterprise has only modest borrowings. The paper feels HIT would perform better if kept independent and therefore investors should reject the recent £490m takeover bid from private equity firm Apax Partners.
The board of Securities Trust of Scotland will meet this weeks to discuss the £325m hostile takeover bid from Perpetual Income & Growth Investment Trust, says the Times.
Securities Trust will find it difficult to fight off the bid given Perpertual's better record and the paper feels a merger would reduce costs.
Enterprise's share price is justified on fundamental grounds after it reported a 35% increase in sales, saw a 20% rise in profits and a further 11% added to the dividend last year, says the Times.
Despite the possibility of rivals copying Enterprise's achievements, and its computer system problems, the paper feels the group should be given the benefit of the doubt and rates it buy.
Investors should not be worried by Forth Ports recent rise in share price, says the Independent. It was undervalued before and is fairly priced now. The paper says hold.
The Independent also says it is not time to buy Oxford BioMedica.
Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.
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