Sunday share tips: Barclays, Berendsen, Galileo Resources

Barclays had a "good" financial crisis. It did not need a government bail-out and it managed to snap up the investment banking arm of Lehman Brothers at a bargain price after it collapsed. However, with investment banking operations come high salaries. Across the whole sector a lot of value was being created by the operation, but a large proportion was being handed to staff in large bonuses instead of being directed to the owners - its shareholders. Nonetheless, there is no doubt that the banking sector is cheap - but things are cheap for a reason. Debt problems and sluggish growth are likely to make the sector volatile. However, the average price target of City analysts is some 23pc above the current share price and the yield is 3.1pc. Ultimately, the sector should be rerated. Indeed, banking stocks were penny shares in the 1970s crisis, before recovering substantially. Investors wishing to play this should buy and hold as a speculative position. But the rating is avoid because of the uncertainty, says the Questor team at The Sunday Telegraph. Berendsen, which used to be known as Davis Service Group, provides textiles cleaning services in the UK and Nordic countries. Last week's trading update confirmed that the trends seen last year have continued. The group launched a strategic review, after which it split its business into a growth unit and one where the operations are being "managed for value". An extensive cost-cutting drive was established - and this is ongoing. Importantly, profit after tax cash conversion was at more than 100%. This is important for investors as it represents the amount of profit turned into cash flow. This is effectively the amount of profit that could be paid to investors without damaging the business. As a result, net debt is now below £500m. First tipped at 401.2p on November 21 2010, the shares are trading on a December 2010 multiple of 10.3 times, falling to 9.7 next year and yielding a chunky 4.7%, rising to 4.9%. This yield should provide a floor for the share price. The shares remain a buy, Questor says.Galileo Resources, a miner of specialised minerals, could prove a real gem. These ores, called rare earth minerals, can be refined into 17 rare earth metals, most of which were of little interest until the past decade. Rare earth metals are not that scarce in themselves, but mineral deposits containing them in sufficient concentrations to make their extraction and processing economically viable are. Prices have risen more than tenfold in the past two years and some of these minerals are among the most expensive raw materials in the world. The position has become so serious that last month, America, Japan and the European Union launched a complaint about Chinese practices. Not surprisingly, a number of mining companies have launched projects to look for rare earths outside China. London-listed Galileo Resources is among them, but it has certain advantages that put it ahead of the pack. The company has invested in a huge mine site in South Africa, known as Glenover. An independent study this month concluded that Glenover's open pit mine has at least another 26m tons of material from which rare earth minerals can be derived. "Small mining firms can be risky investments and Galileo is not for the cautious. But for investors looking for adventure, this is a good place to start. The company´s chief executive, Colin Bird, is a veteran of the industry, rare earth minerals are in demand and countries as far afield as Germany, Japan and America desperately want alternatives to Chinese supplies. Galileo shares are 361/2p and could more than double over the next two years. Have a punt," says the Financial Mail on Sunday´s Midas column.ABPlease 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.