Tips Watcher Alert (UK)

Thursday tips round-up: C&W Worldwide, Hogg Robinson, Domino's Pizza

Date: Thursday 27 May 2010

If newly demerged Cable & Wireless Worldwide (CWW) presents investors with a conundrum, that is not solely on account of its name. Despite its moniker, this is not the bit of the old Cable & Wireless that serves Monaco, Macau and Montserrat, but the fixed-line corporate telecoms carrier that takes in Energis and Thus and does three quarters of its business in Britain. The other confusion stems from CWW’s explicit pitch to shareholders of providing them with growth, rather than income. At 79½p, or ten times earnings, CWW may live up to its growth aspirations. But the risk that it will be punished by the stock market if it doesn’t counsels caution. Pass, says the Times.

It’s said that it is better to travel than to arrive. Not at Hogg Robinson, the corporate travel agency whose shares change hands at less than a third of the price at which they were floated four years ago. Neither did yesterday’s full-year figures do much to send them higher. Net debt has fallen to £78 million, and should continue to drop, but the net pension deficit is stubbornly high: £93.3 million, or bigger than the company’s stock market value. At 28¾p, or five times earnings, and yielding 4 per cent, there should be better times to buy, believes the Times.

If the projections for a recovery in business travel prove to be well founded, then Hogg's could offer exceptional value. But the risks and uncertainties are substantial. So we would suggest a speculative buy only for those with strong stomachs, says the Independent.

City analysts took a bus up to Milton Keynes yesterday to take a look at Domino's Pizza's new commissary. The commissary is expected to be able to service 500 stores and double its capacity over time. Trading on a December 2010 earnings multiple of 22.7 times, falling to 20.2 in 2011, the rating is unarguably high. However, with the company's management's excellent track record of delivery, the cost efficiencies from the site at Milton Keynes are likely to generate earnings upgrades and the expansion plans look achievable. Buy says the Telegraph.

The shares of private-client wealth managers can usually be relied upon to track the ebb and flow of the wider stock market. Not Brewin Dolphin, which has underperformed the FTSE all-share index by nearly one quarter over the past year. The possible adverse effect of a sharp rise in capital gains tax remains a concern. But at 126½p, or nine times earnings and providing a 5.6 per cent yield, the shares look too low, so ‘buy’ recommends the Times.

Property companies have been doing well of late, with updates from the likes of British Land and Land Securities lifting the mood among investors. Shaftesburycontinued the trend with its half-yearly figures yesterday. But while we agree about the long-term prospects, we worry about the short-term picture. We wonder if the West End will be able maintain its resilience in the face of public-sector cuts in the UK and what looks like a growing sovereign debt crisis in Europe. Consumer spending may ebb as economic challenges stack up. Given the economic uncertainties we'd just be holding for now, says the Independent.

You need a good fundamental reason to buy into a company – any bid hopes are an additional plus. Centamin Egypt is emerging as potential prey for a gold major now that it is actually producing gold. However, there are still reasons to own the shares other than M&A hopes. Buy, suggests the Telegraph.

Many dream of back-to-back number one singles in the US. With writers responsible for Rihanna's "Rude Boy" and Taio Cruz's "Break My Heart", the music publishing group Chrysalis Group achieved exactly that, and the good news didn't end there. First-half results were met positively by the market. Investec has its 2011 enterprise value at 15.9 times earnings (before interest, taxation, depreciation and amortisation). Not hugely cheap, but there's more to come, so buy recommends the Independent.