Investment Column: Hold Informa, but wear asbestos gloves

Informa

Our view: Hold

Share price: 231p (+19.25p)

If there's one sector that investors should treat with asbestos gloves in the current environment, it is publishing. There has been little shelter from the financial storm as circulation and advertising revenues fall, yet there is a belief that some stocks have been dragged too low.

There has been a groundswell of support from the analysts who believe that Informa could be worth a punt this year. It successfully picked its way through a potentially thorny rights issue earlier this year, and the proceeds were used to pay down debt.

The FTSE 250-listed group has a solid business, whose publications tend to be in niche, subscription-based titles that do not suffer as badly as its more commercial counterparts in a downturn. Its Academic and Professional & Commercial divisions are still growing, and management has also kept a tight control on costs.

The group pleased investors yesterday by announcing that trading was in line with expectations this year, despite the "very challenging trading conditions".

Yet, the group is having to manage down some of its businesses, including Events & Training, as revenues sink, while the more resilient publishing side could be hit later this year, so the uncertainty is too high to pile in.

If you already hold the stock, keep it in the portfolio, as there is definitely some upside, with the shares trading at 7.3 times 2010 earnings on to Numis' estimates. It could be worth a punt, but remember the asbestos gloves could be handy. Hold.



Premier Foods

Our view: Hold

Share price: 37.5p (-0.75p)

Premier Foods relaunched Hovis last autumn to a fanfare. A blockbuster TV advertisement of the iconic bread brand's history featured a young boy after the Second World War blitz and fireworks on the eve of the Millennium. Stirring stuff, indeed.

Yesterday, there were few sparks as Britain's biggest food manufacturer revealed no change to its previous half and full-year sales and profits forecasts. The market consensus is that Premier Foods will deliver underlying pre-tax profits of £170m this financial year, down from £184m in 2008.

However, the update contained some tasty ingredients. For the half year to 27 June, Premier Foods again revealed "excellent" sales at its bread business, buoyed by the continuing momentum of Hovis. It also said its grocery division's brands, including Sharwood's Asian sauces, Bisto gravy granules and Branston pickle, continued to generate "good growth".

While its chilled business delivered growing sales of its Quorn vegetarian brand and own-label lines made for retailers, Premier Foods said the division's profits had taken a hit from hefty marketing spend and increased manufacturing costs in its meat-free business. Furthermore, the low rating of Premier Foods' shares, which have fallen 54 per cent over the past 12 months, partly still reflect ongoing investor concerns over its £1.4bn of net debt. This is despite a £404m fundraising unveiled in March that Premier Foods said will be used to pay down its debt mountain.

Some City analysts have also questioned the sustainability of its operating margins, particularly in its grocery division. However, its shares trade on a forward price-earnings ratio of 7.4 times, and the City thinks they are fairly priced. Hold.



Titan Europe

Our view: Sell

Share price: 25p (-3.5p)

The wheels are coming off the wheelmaker. Titan Europe, which makes wheels for everything from tractors to mining trains, as well as tyres and braking systems, has been hit hard by the recession. Last August, its shares were more than 160p. Since late October they have never broached 35p.

The company's numbers are not getting better. According to yesterday's half-year trading update, revenues are expected to come in some 35 per cent lower than in 2008, pushing the company to a loss. More than a third of its jobs have gone since January.

Given its core markets, the group's problems are not surprising. Titan says construction division volumes will be down 50 per cent in the first half. The agricultural and mining markets are little better, with both expected to be down between 25 per cent and 30 per cent.

Titan's management is trying to stay upbeat, pointing to recently renegotiated banking facilities as evidence of its lenders' commitment to the business, and "small signs of improvement in order books" in recent months. But the shares still dropped 13 per cent in trading. With only ambiguous signs of economic recovery anywhere, and little but grim news from the eurozone, Titan is a sell unless you have a long time to wait. Sell.

News
people Emma Watson addresses celebrity nude photo leak
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
News
Boris Johnson may be manoeuvring to succeed David Cameron
i100
News
Band was due to resume touring this month
PROMOTED VIDEO
News
people'It can last and it's terrifying'
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Arts and Entertainment
tv
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Life and Style
fashionAngelina Jolie's wedding dressed revealed
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Tom Cleverley
Loan move comes 17 hours after close of transfer window
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
footballRadamel Falcao and Diego Costa head record £835m influx
News
i100
Arts and Entertainment
Madame Vastra and Jenny Flint kiss in Doctor Who episode 'Deep Breath'
tv
Extras
indybest 9 best steam generator irons
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Executive Assistant/Events Coordinator - Old Street, London

£35000 - £38000 per annum + benefits: Ashdown Group: Executive Assistant/Event...

HR Generalist (standalone) - Tunbridge Wells - £32,000

£30000 - £32000 per annum: Ashdown Group: HR Generalist (standalone) - Tunbrid...

Derivatives Risk Commodities Business Analyst /Market Risk

£600 - £800 per day: Harrington Starr: Derivatives Risk Commodities Business A...

Power & Gas Business Analyst / Subject Matter Expert - Contract

£600 - £800 per day: Harrington Starr: Power & Gas Business Analyst/Subject Ma...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering