Market Report: GKN bolts ahead on City thumbs-up

 

The stock market stalled yesterday but car and plane parts maker GKN was in the fast lane as City analysts tipped the group as a winner.

Redditch-based GKN, which supplies car and plane parts around the world, is expected to return to volumes last seen before the financial crisis and analysts at Société Générale said this improved growth could equate to a 28 per cent jump in earnings.

The analysts argued the recovery in Europe “would further improve top-line momentum”, which is already buoyant because of a return to stronger demand for cars in the US.

UK car figures have also been positive. Not only are we buying lots more cars but the aerospace sector isn’t looking too bad either, SocGen pointed out. It predicted margins should benefit from “both a more disciplined approach to pricing and cost savings from recent restructuring”.

The Footsie took a breather and even the staggeringly successful investor Warren Buffett, warned that he is finding it difficult to buy shares.

The 83-year-old Sage of Omaha, who has run Berkshire Hathaway for more than four decades, lamented: “We’re having a hard time finding things to buy.”

The investment star made his comments after the US Federal Reserve decided not to start tapering quantitative easing yet. Mr Buffett’s strategy of value-investing has been harder to pull off. As stock markets surged in London on Thursday, he said shares “were very cheap five years ago, ridiculously cheap, and that has been corrected”.

Investors in the UK agreed as yesterday’s buying spree turned into profit-taking. The FTSE 100 declined 28.96 points to 6596.43.

European equity traders were also cautious ahead of the German election at the weekend and there was some concern after comments from US Federal Open Market Committee member James Bullard when he said the Fed may start winding down the quantitative easing at the October meeting.

Despite the wider market taking a break from buying, some traders were pushing the rumour that oil giant BP is being eyed by US rival Exxon Mobil. The spurious talk accompanied a 1.95p rise to 442.05p for BP.

Analysts at Citi took a good look at the discount supermarket businesses of Lidl, Aldi, Farm Foods and Iceland in the UK, and decided the big four supermarkets should up their game to compete in the long term. Citi’s experts said that although the “notion that Tesco… ‘goes nuclear’ and bludgeons the discounters on price” is not realistic, some supermarkets have reinvented themselves like “Kroger in the United States” so the UK’s players should consider how to adapt. Citi said that although Sainsbury’s, Tesco, Morrisons and Asda “cannot jump from the burning platform together and enact a Kroger-like transformation”, they should take a look at how successful the discounters are. Despite the warnings, Citi upgraded Sainsbury’s to neutral from sell ahead of its second quarter update next month. Citi raised its target price to 400p from 350p and it was 5.4p better to 396.4p.

Mid-cap insurer Direct Line rang off 8p to 210p after state-backed Royal Bank of Scotland raised £630m by selling a 20 per cent stake in the group.  The buoyant first day of stock market trading for Foxtons lifted fellow estate agency Countrywide 12p to 570p. Brokerage group Icap slipped 18.5p to 391.2p when Bank of America Merrill Lynch downgraded it to neutral and reports on details of a fine coming next week for its part in Libor rigging.

Canaccord Genuity’s fashion followers forecast that a strong trading update from Asos earlier this week “should provide confidence in a strong start to the… season for SuperGroup”. Canaccord’s analysts said the fashion group that owns the Superdry brand is “too cheap for premium growth”, and rated it a buy with a 1,500p target for shares that were 2p better at 1,171p.

On AIM, Trading Emissions, which invests in tradable environmental permits, said its Brazilian subsidiary had warned that its Bionasa Combustível Natural business has been “experiencing severe financial difficulties”. Trading slipped 2.5p to 18.1p.

Gulf Keystone Petroleum revealed that non-executive John Bell has bought 72,200 shares at a price of 201p and it was 9.25p better at 209.25p.

Skyepharma was boosted by news that its Flutiform lung treatment has been approved in Japan and it was 10.125p healthier at 95p. Malaysian mobile messaging software group Macromac closed its first day of trading on AIM up 4p at 15p.

Buy

Restaurant Group

Gobble up shares in Restaurant Group, Canaccord Genuity suggests. The house broker thinks the group’s planned investment in its new brand and management structures bodes well for growth which it thinks will accelerate over the next few years. Canaccord rated it a buy with a 650p price target for the group, which owns restaurant brands including Frankie & Benny. The shares are 540.5p.

Sell

Royal Bank of Scotland

Flog shares in Royal Bank of Scotland, Investec insists. The broker notes that RBS sold a 20 per cent stake in Direct Line and raised £630m. But Investec thinks the biggest issue for the state-owned bank is its “declining core profitability.” It rates RBS a sell with a 345p price target for shares that are 364.4p.

Hold

Vedanta Resources

Hang on to Vedanta Resources, Liberum Capital advises. The broker thinks that with so much political uncertainty in India, it is a risk investing in companies exposed to the country. But it remains optimistic of a lifting of the iron ore export ban which is currently in place rates miner Vedanta a hold for now with shares that are 1,116p.

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Sport
The giant banner displayed by Legia Warsaw supporters last night
football Polish side was ejected from Champions League
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
news
PROMOTED VIDEO
News
i100(and it's got nothing to do with the Great British Bake Off)
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
News
news It's not just the world that's a mess at the moment...
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
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

Data Scientist (SQL,Data mining, data modelling, PHD, AI)

£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone