Sunday newspaper tips: 3i Group, Inspired Energy, Inmarsat

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Sharecast News | 12 Feb, 2017

3i Group shares received a 'hold' recommendation in the Sunday Times' Inside the City column. While its financial are solid and investors are happy with the more than threefold rise delivered under CEO Simon Borrows, the private equity group is facing ever more pressure for buyouts.

Much of the gains under Borrows are thanks to the investment in Dutch discounter Action, which is growing fast and has seen 3i's investment holding worth around £1.5bn. At around a third of the entire portfolio value, investors may be concerned the group's success is too reliant on this one investment. 3i, which now invests its own cash with no outside investors, "has left little margin for error should its future investments fail to repeat Action’s success".

Shares in Inspired Energy were tipped as a 'buy' by Midas in the Mail on Sunday. The Lancashire company helps firms cut their power bills, with its 1,600-plus corporate clients including Kwik-Fit, Formica and Muller Milk and Ingredients. Using close relationships with 17 energy groups in the UK, including all of the Big Six, Inspired's two services are buying gas and electricity for clients and providing advice on how best to manage energy needs.

Inspired floated on AIM just over five years ago and, helped by seven acquisitions, has grown its market valuation from £12m to more than £60m. Profits are expected to soar 40% to £6.3m in 2016 and then to at least £7.9m in 2017, with the dividend forecast at 0.45p for 2016 and 0.5p for 2017. The share "have barely moved in a year and are seriously undervalued".

Inmarsat was a 'buy' for the Telegraph's Questor, for investors who can look was the satellite broadband specialist's short-term turbulence and see the longer-term potential. Troubles in the maritime market sent the shares falling to earth last year before they later rocketed higher only to be severely dented by news this January that higher start-up costs would send aviation earnings down before recovering in 2018.

A possible recovery in maritime and improving government revenues provide a basis for a bounce back, while the European Aviation Network venture with Deutsche Telekom holds hope for extra gains, with a first satellite to provide in-flight internet to be launched later this year. Analysts at Euroconsult forecast the market for passenger connectivity to rocket from $700m in 2015 to nearly $5.4bn by 2025, which allows Inmarsat plenty of room even if competitors up their game. Lufthansa, Air New Zealand and IAG have already signed up in advance for Inmarsat's services.

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