Tuesday tips round-up: Afren, Pearson

In yesterday's trading statement Afren announced that revenues in 2012 are expected to be a record 1.5bn dollars, up 151 per cent on 2011. That means that the company, which generated in excess of 1bn dollars of free cash-flow, easily has enough to fund capital expenditure of 520m dollars. That suggests little prospect of a further cash raising, which has held the shares back in the past. Furthermore, its forecast for an increase in production does not even include any contribution from its Kurdish assets. As well, the company is increasingly active on the exploration front. Afren's spread of assets is an attractive one. As ever with explorers, it is hard to say how much of the unproven reserves is in the share price, but there is plenty of promise in East Africa, in particular. As its price graph shows, the shares have been a strong market since the middle of last year. Probably up with events, ahead of any favourable Kurdish news, The Times's Tempus column says. "Three weeks into the year and the first of my Tempus tips stumbles," the well-known columnist writes in today's Times. Nevertheless, "Pearson is still ahead of the price when I tipped it, but a muted profits warning makes clear that the American education market is tough. I went for the shares, though, because of the prospects in emerging markets from its education business; an eventual sale of the Financial Times would provide a boost, too. The shares were notable poor performers last year. Stick in there," he goes on to say. Pearson has spent the past four years as one of the best performing media stocks about, increasing its profits with metronomic reliability despite the headwinds facing the sector. However, the company's growth opportunities are narrowing. Meanwhile, although Pearson's emerging markets businesses are growing rapidly, they are some years yet from becoming the powerhouse the company badly needs. Furthermore, Pearson's top brass are pinning their hopes at this point on improving the company's execution and reducing costs. These sorts of changes are far easier to identify than to deliver. As if that were not enough. Pearson has enjoyed a very stable management team for the past few years, thanks in part to the dangling carrot that they could eventually take the helm. That carrot has been yanked away, and some of those managers are leaving ? as evidenced by the resignation of Rona Fairhead, Chief Executive of the FT. Pearson is still a solid and well-run company. But with clouds gathering on the horizon, other media stocks like BSkyB and ITV look more appealing, The Telegraph's Questor team says. 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 Pearson