LONDON Tips Watcher Alert

Tuesday tips round-up: Invensys, Elementis, Cranswick

Date: Tuesday 25 May 2010

Invensys revealed yesterday its order book grew from £2bn to £2.3bn, and the company has been especially focusing on emerging markets, which account for 40% of orders.

It has £363m in cash on the balance sheetand there could still be value to be found as the economy recovers. Buy says the Independent.

Elementis, the chemicals group whose products are used for everything from waterproofing mascara to coating metals, appears to be in its element. So much so that, despite forecasting a pullback in earnings in the second half compared to the first, the company now expects full-year results to come in "well ahead" of expectations. Trading on just 8.3 times this year's earnings, Elementis shares are cheap. Buy says the Independent.

Elementis is a cyclical stock that would be vulnerable to a double-dip in world economic growth. Even so, at 66¼p, up 6¼p, or nine times earnings, it is not too late to buy says the Times.

The broader investment case for pork products specialist Cranswick is relatively simple: further advances in profit driven by the company’s investment in new processing capacity, occasional bolt-on acquisitions funded by a strong balance sheet, and the attraction of pork as a growth category within food. And, unlike two years ago, Cranswick is a volume supplier to all of Britain’s “big four” supermarkets. At 827p, or less than 12 times current-year earnings, and providing a solid 3% dividend yield, hold says the Times.

Mulberry, the luxury fashion brand and retailer, signalled its growing confidence yesterday by revealing it had signed leases for a new flagship store and head office in London. Mulberry has momentum but, at 25 times earnings, investors should wait for the shares to cool down before shopping again. For now, just hold says the Independent.

Traders and hedge-fund managers love volatility. It presents plenty of opportunity for profit. One hedge fund that has done very well out of volatility is BlueCrest, set up by Michael Platt. The fund has a listed arm that is available to private investors, which is essentially a fund of funds investing in all the different investment strategies that the group operates. The share price is based on the net asset values (NAV) of each of the individual funds and, on May 7, the total NAVs was 158.73p an increase of 3.61% since March 31. This is a slight premium to the current share price. A buy for those investors seeking a speculative way to play market volatility says the Telegraph.

Staffing agency Morson derives much of its sales from engineering projects ultimately funded by the public purse (notably rail infrastructure and defence).at 97½p, a modest multiple (only seven times forward earnings) and solid 6.2% dividend yield should provide a sufficient draw. Buy on weakness says the Times.