Friday tips round-up: Smith&Nephew, Vodafone

Orthapaedics manufacturer Smith&Nephew has proved deft at moving into high-growth areas while slashing costs. Nonetheless, the shares are overpriced. Since 2011 the company has splashed out $2.8bn on 15 different acquisitions, moving into areas such as sports medicine, thus reducing its dependency on the market for hip and knee replacements and its sensitivity to macroeconmomic trends. When economic times are hard, patients opt to postpone what are often non-essential procedures. The company has also grown its footprint in emerging markets and in the bio-active wound treatment space.Smith&Nephew has also been whittling down its costs. Last year it identified another $120m in potential cost savings. The purchase of Arthrocare is also expected to allow for another $85m in savings, as the combined firm employs its own network to distribute its products. The shares' rating is high and seems to be based on expectations for a bid from US outfit Stryker. However, there is no guarantee that will happen, so unless you are prepared to punt on the possibility of that bid the shares are best avoided, writes The Times's Tempus.Times are once again looking up for Vodafone. The company may again be seeing genuine revenue growth as it begins to put on net business. In the third quarter to the end of December the firm saw its sales slip by 0.4%, an improvement on the previous quarter's drop of 1.5%. More important however are the £19bn the outfit will be investing this year and next in its European network, the so-called Project Spring. Those investments seem to be starting to pay off, with the UK growing again and new customer numbers in Germany alsmot doubling in the third quarter. From 2016-17 onwards the drag from investments on the company's cash-flow is also set to drop out.In the long-term Vodafone does face competition from moves towards the so-called "quad play" in the UK, yet management continues to believe it can continue to modestly increase its payouts to shareholders. The shares currently offer a 4.9% dividend yield which is reason enough to buy, Tempus says.