Sunday share tips: ARM Holdings, Northbridge, GB Group

Everyone calm down. That seems to be the message from analysts who follow Britain's greatest tech success story, ARM Holdings. When you consider that over the last three months of 2012 alone an estimated 219m smartphones were sold, and that ARM powers about 90% of the market, the 1% and 3% royalties quickly add up. Not surprisingly, the City is expecting a strong showing when the firm reveals its annual results on Tuesday. Analysts have pencilled in £285m of pre-tax profits, a 25% improvement on the £229m the company banked last year. As often happens, investors appear to have got ahead of themselves. By Friday's close at 893½p, the firm's shares were trading at a whopping price-to-earnings ratio of 44 times. That is at the high end of its historic trading range and well beyond the sector average. And there are potential speed bumps in the road. The biggest is Intel, who has belatedly had to jump into the exploding smartphone industry. Analysts don't expect it to make a big difference to ARM's stranglehold any time soon. They will, nonetheless, be keen to hear ARM's view on the potential threat. However, for those who already own it, now may be a good time to take some profits.Northbridge, although relatively small, is the largest supplier in the world of pieces of equipment called loadbanks. These are designed to test and service every type of power source, including generators, turbines and batteries. Customers range from banks to hospitals and from aircraft makers to energy providers. In some cases, Northbridge simply sells its equipment. Most of the time, the products are rented out and Northbridge provides servicing teams to run the right tests. The business has grown rapidly since joining AIM in 2006 and its prospects are strong. The company´s founder, Eric Hook, has been expanding the business organically and by a series of well-timed acquisitions. Between 2007 and 2011, turnover more than doubled, profits tripled and the dividend increased 66%. For the Financial Mail on Sunday´s Midas column, "Northbridge Industrial Services is a clever little business that is destined to become much larger over the next few years. Buy now while the shares are undervalued." GB Group helps companies to work out whether their customers are who they say they are. Companies need to be able to check the identity of online customers almost instantaneously and GB provides the software that enables them to do just that. The business has begun to expand internationally too, as consumers purchase more goods from overseas, increasing the need for instant, online cross-border identity checks. Growth has come partly from acquisitions but also because consumers are increasingly using the internet to pay bills, do their banking, gamble and go shopping. Brokers expect strong growth from GB for at least the next two years and there is always the prospect that governments will force social networking sites to run ID checks on new members. For Midas, investors who bought GB shares in 2009 may want to sell a quarter to a third of their stock to bank some cash after a strong run. But they should keep a substantial chunk of their shares as the company looks set for further growth. New investors might even buy some stock at current levels.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.AB