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Thursday tips round-up: Prudential, Northbridge, FirstGroup

Thu, 12th May 2011 06:54

It's not often a company says it wants to slow down a booming business but that's what Prudential said about its US Jackson Life operation yesterday. Prudential remains a great long-run investment in Asia's economic and demographic strengths but for those with a shorter horizon the US may prove something of a distraction. That may hold back the shares, we think. So, while this still a great story, it's not one that we would buy into right now. Hold, says the Independent.Northbridge Industrial Services is a holding company, one of its main subsidiaries being Crestchic. The latter designs, makes, sells and hires "load bank" equipment, which is used for the commissioning and maintenance of independent power sources. Northbridge's shares responded positively to 2010 results and prospective investors might be advised to stand back and see if the summer brings a period of consolidation, but this is definitely a company on which to keep an eye. Hold, says the Scotsman.FirstGroup is keen to emphasise that four out of five of its businesses performed in line with or significantly better than expectations. This is a bit like saying that four out of five trains ran on time. it is the performance of FirstGroup's First Student business in America, where it operates those iconic yellow buses for schools, that continues to be the real concern. The earnings multiple, about 8½ times this year's profits, looks attractive but the uncertainties look set to remain, says the Times.However, the Independent says any signs that a recovery plan at First Student business is working could prove a major catalyst to FirstGroup's shares and has a buy rating on the stock.Marshalls makes paving and other street furniture. Revenues for the first four months of the year were 10% higher at £113m, public sector and commercial ahead by 17% and domestic 7% against the previous year. The shares change hands on a hefty 23 times next year's earnings and it may be a while before profits recover to a level that would justify that rating. Still, there is the support of a 4.3% dividend yield to be going on with, says the Times.Bovis and Barratt Developments reported results yesterday, painting a fairly optimistic picture for the housing industry, with forecasts that sales would pick up throughout the year. Bovis reported a higher average private sales rate, and a strong land bank which bodes well for the future. Yet the housing market continues to operate "well below historical activity levels", according to management.Robin Hardy, an analyst at Peel Hunt, values the stock at 23 times forward earnings for 2012, which he says is "far higher" than that of the larger house builders". Hold, says the Independent.---RGPlease 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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