The Week Ahead: Petra still showing diamond potential
Monday 16 September 2013
Making money from finding shiny diamonds in the ground is as hard as the shiny gems as the miners try to find. Costs have to be tightly controlled for a miner to make a good profit. But analysts think Petra Diamonds has managed just that. So although earnings might be a little behind the same time last year when it reports its full year results today, Rob Broke, analyst at Westhouse, maintains his Add recommendation. He thinks the company’s “respectable cost control” has made it still an attractive stock. Numis expects its results to be in line with expectations and thinks the “diamond market remains firm.”
Results/Updates: Allergy Therapeutics, Corac, EKF Diagnotics, Optimal Payments, Petra Diamonds, Shore Capital, Toumaz, Waterlogic.
Like all the housebuilders at the moment investors expect Crest Nicholson to report strong trading at its update tomorrow driven by Help to Buy and an improving economy. Analysts at Peel Hunt reckon further shares will be placed in the market following the end of the lock-up period, so investors will be paying close attention.
Departments store group Debenhams is likely to reveal a good fourth quarter at its results tomorrow. Andrew Wade at Numis reckons the better weather and improved consumer spending trends will mean the shop chain is likely to report like-for-like sales up 3 per cent and expects it to reiterate its full-year guidance between £150-157m. But Mr Wade is also cautious and thinks that Debenhams’ UK business is on a declining trend and faces “headwinds” and, in the longer term, is negative of the stock.
Results/Updates: Burford Capital, Camkids, Charlemagne Capital, Crest Nicholson, Debenhams, Galliford Try, IG Group, Imagination Technologies, Investec, Pan African Resources.
Housebuilders must be very grateful to the Government for its Help to Buy scheme and other initiatives that have allowed them to prosper again. Redrow’s results on Wednesday are likely to show it is one of the winners. Analysts at HSBC think the “smaller listed” players offer a “compelling structural growth opportunity” and they rate Redrow a buy with a 320p price target. HSBC’s housing experts also reckon Redrow “offers one of the highest potential returns in the housebuilders’ sector.”
Results/Updates: French Connection, Highland Gold, JD Sports, eg Solutions, Redrow, Serviced Office Group, Smiths Group, Town Centre Securities.
After a big week last week Aim-listed oil explorer Gulf Keystone Petroleum will unveil its results on Thursday. The Kurdistan-focused company, last week hired Deutsche Bank to help it make its move to the main list. The retail investors favourite also last week won a court case over the ownership of its Kurdistan fields. It has been in the process of splitting its chairman and chief executive roles and has brought in a number of independent directors. The shares have reacted favourably in the past week and traders have suggested the group will be put up for sale now. But many analysts have rated the shares a sell ahead of the results and think a sale of the group will still be tricky. Dragan Trajkov, analyst at Westhouse, said: “The shares rallied and we believe the market’s perception is the conclusion of the case removes an obstacle towards the sale. But we believe the main obstacle for a potential sale is political uncertainty in Kurdistan rather than the litigation case. Thus, we think this may be a good exit opportunity for investors.”
Results/Updates: ASOS, Booker, Gulf Keystone Petroleum, IQE, Networkers International, Mission Marketing, Northgate, Premier Farnell, PFL, Sinclair IS Pharma, SPH, Swallowfield, United Utilities, Wilmington.
The end of the week is a quiet day for corporate results and online market research agency Brainjuicer Group might get more attention than usual. The Aim listed group went through a restructuring process last year and cut jobs. It produced its worst set of full year results in March since it was founded in 2000 so investors will be hoping it will start to show signs of a turnaround now.
Results/Updates: Brainjuicer, Tawa.
Rightmove house price data, US Empire State Manufacturing Index.
Producer price index, Office for National Statistics house price data, consumer price index, retail price index, US Housing Market Index.
Bank of England Monetary Policy Committee Asset Purchase Facility and Official Bank Rate meeting minutes, German ZEW Economic Expectations data, US Federal Funds Rate, Federal Open Market Committee Economic Projections and FOMC Press Conference.
Retail sales data, Confederation of British Industry – total orders and selling price trends, EU Libor Rate update, US Existing Home Sales and US unemployment claims.
Public sector borrowing data, EU consumer confidence.
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