Tuesday tips round-up: Mitie, Shell

Management Incentive Through Investment Equity may prove to be the proverbial 'mouse that roared', writes The Times' Tempus. Yes, Mitie. Once criticised for its relative lack of exposure to central government contracts the outsourcing specialist has been quietly restructuring itself towards higher-margin work, such as healthcare. Out has gone mechanical and electrical engineering work. As well, the company might be expected to pick up some work from its troubled rivals such as Serco and G4S. Acquisitions, albeit not large ones, also seem to be on the cards. This year will be a bit of a transitional one. Indeed, it will be more second half weighted than typical. Furthermore, the company is in the process of washing out contracts from work now deemed non-core, which will weigh on revenue growth. The scope for organic growth looks limited but a large deal - such as a prisons contract due to be announced in autumn - could trigger a rise in the stock. "Hold", Tempus says. Investors should be content that Shell has offloaded its stake in the Haynesville natural gas field to private equity group Blackstone. Yes, the US outfit is taking advantage of a forced sale but to an extent that is a part of its function, as a sort of "bottom-feeder" acquirer. Blackstone will be hoping that another cold season will help draw supplies of natural gas down further. Such a scenario - a big 'if' - might see the gas prices revisit the $6.5 per million cubic feet level, as opposed to under $4 now. The oil and gas giant, meanwhile, can concentrate on those assets which meet its short-term targets for returns - as per its mandate from investors, the Financial Times' Lex column says. Not to be forgotten, Lex points out, costs from Haynesville remained too high on account of the sharp production declines typical of the Haynesville area. 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 Mitie