Market Report: De La Rue might be worth banking on
Tuesday 11 December 2012
Forget about putting cash under the mattress, it could be time to start buying shares in banknotes printer De La Rue, analysts reckon. JPMorgan's scribes think the stock fell too low after the notes printer cut its profit forecast last month and now there is a "compelling opportunity" to buy the shares. Its Bank of England contract is up for grabs with a call for bids by the end of January. De La Rue has held it since 2003 but JPMorgan's Alexander Mees said he thought there was "no reason not to expect De La Rue to be successful".
A move from paper to polymer might also be on the cards. De La Rue is one of only two makers of polymer bank notes globally. JPMorgan points out that Canada's central bank dropped paper for polymer and its governor, Mark Carney, will be the new Bank of England's governor. So could polymer arrive here too? De La Rue might be able to get the printers rolling, Mr Mees thinks.
Its shares had fallen around 13 per cent since the update last month but buying volume in the stock was up today following JPMorgan's note and the shares gained 4p to 931p.
No tequila slammers for spirits group Diageo today. Diageo's Paul Walsh could not agree a deal for the Jose Cuervo tequila brand from Mexico's wealthy Beckmann family, and the $3bn (£1.9bn) deal is dead. News of the collapse caused some traders to hope talk of Diageo's interest in United States group Beam is more likely again. Diageo's shares staggered down 31p to 1,855.5p.
Tullow Oil shares slipped to the bottom of the benchmark index after its move out of the UK and a step into Norway were offset by its disappointing well update in Ghana. Analysts at Bernstein and Barclays cut their share price targets for the stock to 1,830p and 1,845p, and the shares were down 106p to 1,150p.
There were growing concerns about the eurozone debt situation. Greece secured a crucial debt deal, but not on as good terms as the markets had hoped. But the blue-chip index gained 3.34 points to 5,924.97 as investors hoped talks in the US between President Barack Obama and Republican John Boehner will eventually reach agreement on spending cuts and tax rises. Some also hoped there could be an announcement of further stimulus from the US's Federal Reserve.
Traders hoping for some M&A activity thought the old ones are the best ones, as chat re-emerged that power station owner Drax could be a takeover target for Centrica. Centrica's shares powered up 2p to 337.3p and Drax climbed 7.5p to 558p.
Plant and tool hire firm Ashtead reported strong sales – clearing the wreckage left by Hurricane Sandy in the US helped its business – but its shares declined 0.8p to 389.7p.
In London, Home Secretary Theresa May will be making a speech on immigration at the Policy Exchange today in a move that is likely to be good news for UK businesses. It is thought she will outline plans to ease the visa process for overseas tourists including Chinese visitors. The news will benefit the likes of luxury goods group Burberry, which ended today down 12p to 1,304p.
Go-Ahead gave a robust trading update but shares in the buses and trains group reversed 10p to 1,255p.
Platinum miner Lonmin completed its share placement and its shares rose 7.8p to 279.8p.
Is it time to start buying chocolate retailer Thorntons? Just ahead of Christmas may be a good time to invest, house broker Panmure Gordon thinks. Panmure's Philip Dorgan started covering the sweet seller with a price target of 50p and said "we believe that Thorntons can increase its margins, through better buying, improved product mix and manufacturing efficiencies". Its shares sweetened 4.62p to 42p. But remember, Panmure once advised punters to buy shares in JJB Sports and the company was placed in administration last October.
Sport gaming group Sportech has secured a US gaming licence for horseracing in Connecticut and its shares raced up 2.25p to 69.25p.
Over on AIM, an upbeat update from property group Terrace Hill helped it up 1.38p to 11.62p. Alternative fuel specialist Oxford Catalysts placed shares at 125p to raise £30.6m. The shares fell 2p to 146.5p.
Oil and gas servicer Greka Drilling won a 100 well drill contract for Sinopec projects in China's Ordos basin. The shares gushed 0.38p to 9.25p.
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