With a market value of £2.3bn, Tullow Oil is one of Europe's biggest independent oil and gas explorers. Founded in the mid-1980s, the Irish group was transformed recently by the purchase of several North Sea gas fields from BP.
Last year, Tullow produced 120 million cubic feet of gas from these fields, and thanks to the high price of the commodity, it generated a tidy sum of cash. The group's is using this money to fund a programme of oil exploration in Africa and Asia. This week came good news from a key Tullow investment in Uganda.
Data from the Mputa prospect confirmed that it contained oil, but investors will have to wait until the results of a later study to find out whether it is a commercial resource. If it is, and contains between 250 and 300 million barrels of oil, the construction of an export pipeline will follow.
Analysts believe Mputa could add as much as 70p a share to Tullow's valuation. However, the group is well diversified in Africa, so even if it disappoints there are plenty of other prospects for it to go for. Although Tullow shares have risen by more than 350 per cent over the past two years, they are still worth holding on to.
It is very likely French Connection will be unable to pay a dividend this year. That was the stark warning from Numis Securities to shareholders in the fashion retailer this week. The reason for this sorry state of affairs is simple. French Connection hardly makes any money these days. Numis expects it to make a pre-tax profit of just £2.6m in the current year. This compares with £12m last year and £34m the year before. The shares, which trade at 50 times forward earnings, should be sold.
With the World Cup just around the corner, now is a good time to be an expanding five-a-side football centre business. Powerleague, Britain's premier player in this field, is doing just that. This week, it announced the purchase of 10 new pitches in Bolton, and it has also recently opened a new centre in the City of London. Forward bookings are strong and Powerleague generates extra cash by getting companies such as Nike to sponsor events it organises. Buy.
The first quarter of Premier Farnell's financial year is always its strongest. But this week's results from the electrical components distributor beat the expectations of the most optimistic in the City. For the three months to the end of April, the company notched up a 25 per cent rise in pre-tax profits to £16.3m, aided by double-digit sales growth in Europe and the US. Hold.
Computer Software Group describes itself as a niche IT consolidator - it buys small software and IT companies and then integrates them into one of its accountancy, charity and law divisions. With pre-tax profits up a staggering 150 per cent to £2.3m last year and the part of the software world on which CS Group focuses ripe for consolidation, the shares now trade at nine times forward earnings. Hold.
Vedanta made a profit of over $1bn last year, a record for the mining company. It generated free cashflow of $600m, has next to no debt these days and has just unveiled plans to become the only company to produce 1 million tonnes per annum of zinc, aluminium and copper by 2010. This effectively doubles its production, though there is a possibility prices will soften going forward. With this backdrop, even though the shares are likely to remain volatile in the near future it is worth tucking some away for the long-term.
Waste management group Shanks recently disappointed investors when it failed to win the biggest single prize open to players in its industry - the contract to manage Greater Manchester's waste needs. For the year to 31 March, profits before exceptional items rose to £34m from £30.7m previously while turnover increased 5 per cent to £443m. The figures were aided by a turnaround at the group's UK waste business and an improved performance in Holland. For the current year, City analysts do not expect much of an improvement in earnings. Avoid.
Full-year results from Printing.com showed a 44 per cent jump in the number of outlets it has in the UK to 172. There was also a 60 per cent jump in profits to £2.4m and a rise in the dividend to 1.75p a share from 0.5p previously. Although Printing.com owns some of its outlets, the group's expansion is mainly driven by franchise or so called "bolt on franchises" where an independent printer enters into a partnership with the company. Under this arrangement they keep their own name but outsource the work to Printing.com's Manchester hub. The company is in the process of significantly raising the capacity of its Manchester facility and is expanding overseas. Factor in potential growth and the current valuation, 17 times forward earnings, is not demanding. Buy.
The above recommendations are taken from the daily Investment Column
ICAP looks the smart buy in times of market mayhem
The recent turbulence in the global stock markets may be sending many investors running for their tin hats, but the brokers at ICAP are rubbing their hands.
The "inter-dealer broker" (IDB) - essentially a middleman between buyers and sellers of shares, currencies and various fancy derivatives - thrives on market volatility and uncertainty.
Over the past three months, ICAP's business has surged 80 per cent ahead of the same period last year, culminating in a record month for both volume and value of trading in May.
Under its chief executive Michael Spencer, the company has burgeoned into the runaway market leader, handling trades worth $1 trillion each day and commanding a 29 per cent share of the global IDB market.
Profits before tax for the year to the end of March of £204.3m were some 12 per cent higher than the previous year. They hit even the most optimistic forecasts by City analysts, yet the stock rose just 1.75p to 493p, valuing the business at £2.9bn.
The stock now trades at 19.8 times forward earnings and, at first glance, looks expensive against peers such as Collins Stewart and the wider market. However, ICAP's shares may have a way to run yet.
Its $775m acquisition of EBS, a currencies and commodities trading platform, is slated to complete on Monday. Spencer, a pioneer of industry consolidation, contends that the deal will transform his company once again and help it claw in yet more market share.
In torrid times, ICAP still looks a smart buy.Reuse content