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Friday tips round-up: Compass, Homeserve, Shanks

Fri, 30th Sep 2011 06:27

The trading update from the catering giant Compass did not do much for its share price yesterday. This is a resilient business with a strong balance sheet, so much so that some analysts are eyeing the possibility of a capital return to shareholders in the not-too-distant future. Moreover, on multiples of under 13 times forward earnings, Compass remains affordable. The Independent says buy.HomeServe offers cover for domestic emergencies such as burst pipes, broken boilers and blocked drains. HomeServe markets itself through utilities such as Thames Water. The attraction of the business, aside from that growth, is the recurring nature of the income, paid by direct debit. The shares are pricey, selling on about 17 times this year's earnings, but this seems justified; buy on any weakness, says the Times.Any further moves towards recycling are good news for Shanks Group, now shorn of its own large landfill operation and focused on disposing of waste in an environmentally friendly way. Shanks' green credentials mean the shares command a high multiple. They are on approaching 16 times this year's earnings to the end of March, which looks about up with events, the Times says.Man Group would not be the only company to see an overreaction to a profits warning this summer. It was the first fund manager to report for September ? Aberdeen Asset Management's figures earlier in the week went only as far as the end of August. The shares have the support of a dividend yield approaching 8 per cent. The dividend will be reviewed, and if the market carnage goes on, will be cut. But if the carnage goes on, I suspect Man's dividend yield will be the least of our problems, the Times says.Unite took an axe to its senior management yesterday, promising savings of £2.5m annually after a £1.5m upfront cost has been absorbed. Among casualties was the student accommodation group's chief operating officer of 10 years; he cost nearly £400,000 in 2010. Given that one analyst estimated that admin costs had mushroomed by 27% over the past three years, this is welcome, if somewhat overdue. On the downside, Unite's debt is higher than we'd like, but the shares trade on a ridiculous discount of more than 50% of their 2011 forecast net-asset value. Even with the potential challenges, that's too high, says the Independent, which says buy.Roxi Petroleum, the Kazakhstan-focused oil prospector, took some much-needed steps to get its financial house in order yesterday. The company, which saw its stock spike by nearly 48% earlier this month on errant talk that it had made a significant oil discovery, said that it needed to reduce short-term debt levels and to raise additional funds to continue developing its key 1,561 sq km BNG project, also in Kazakhstan. The shares continued their recent descent last night, after peaking at nearly 4.5p on 9 September on the back of the rumours. But they remain a whisker above the 2.6p they were fetching before that, and yesterday's developments should steady the ship. The Independent says buy.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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