Market Report: Search on for shares to weather the cold
Thursday 28 March 2013
The City's weather-watchers yesterday said it was time for shares in pothole fillers, travel companies, funeral providers and coat sellers to warm up on the back of the freezing conditions. The extended winter climate gave Peel Hunt's scribblers a chance to pick likely success stories. The Scottish road mender Breedon Aggregates, holiday groups Thomas Cook and Tui Travel, funeral provider Dignity and fashion company Supergroup were among their predicted winners.
Peel Hunt's analysts think "road surfaces already weak from under-investment will suffer substantial damage … cold and wet weather tends to increase death and … after nearly 12 months of poor weather in the UK, the prospect of guaranteed sunshine has to have an increased attraction for many".
Shares in Tui were top of the tree after the group said it was confident that it would hit the upper end of profit guidance for 2013, helped by a strong finish to winter holiday trade and a rise in summer bookings. In a trading update, the world's biggest tour operator said UK and Nordic bookings were ahead 9 per cent. The shares travelled up 8.8p to 319.1p but Thomas Cook dipped 1.5p to 114.2p.
The aggregates specialist Breedon was static at 22.5p, while Dignity edged down to 1,405p. Peel Hunt said Supergroup was also likely to benefit because of its focus on "high levels of denim, hoodies and outerwear". The shares were down 12p to 599.5p for now.
Cautious investors watching the ongoing Cyprus bailout situation amid persistent eurozone fears were distressed by confirmation that the UK's gross domestic product contracted by 0.3 per cent in the fourth quarter of last year. The FTSE 100 index recovered some of its earlier losses during the day, but finished down 11.81 points at 6,387.56.
The Scottish oil and gas services group John Wood agreed a three-year North Sea contract extension from CNR International, which allows Wood to secure employment for 200 offshore and 250 onshore staff, from offices in Aberdeen, Runcorn and Hull. The shares built up a 7p gain to 863.5p.
Berenberg Bank rated the taxpayer-owned Royal Bank of Scotland a sell and said it is "overvalued and, until the capital structure/government shareholding is simplified, it is hard to argue why investors would want to own the shares". The market viewed the Financial Policy Committee's decree on capital requirements as bad news for RBS and its shares slipped 8.9p to 277.1p.
Deutsche Bank upped its share price target for the supermarket group Tesco to 440p from 394p, and the shares checked out an increase of 4.45p to 377.7p.
The struggling credit-card protection group CPP got a 1p-a-share bid from its founder and majority shareholder, Hamish Ogston. Small cap-listed CPP announced earlier this year that it must find £40m to avoid going into administration. The group, which has been hit by massive Financial Services Authority fines for mis-selling, last week warned that there is "significant uncertainty" as to the value of its shares. The shares lost another 0.1p to 2.97p yesterday – a far cry from the 235p a share that they listed for in March 2010. Mr Ogston now has until 5pm on 24 April to say whether he intends to proceed with his offer.
The construction group Costain is buying the road maintenance and bin collection group May Gurney in a £177m deal. Liberum Capital's scribes think the deal adds significant risk, but they admit that the "economics look attractive". They reiterate their buy recommendations. Costain's shares fell 23p to 280p, while May Gurney's rose 65.5p to 250p.
Nigel Wray, the Serial entrepreneur and Saracens chairman, has upped his stake in the Aim-listed cab maker Eco City Vehicles to 15.27 per cent. The shares drove up 0.08p to 1.75p.
Bellzone Mining's shares slumped 5.25p to 6.25p after it admitted that there are limited iron ore resources at its flagship Kalia Mine Project in west Africa.
The oil group Iofina jetted up 7p to 185p, pushed by day traders.
The retail property group NewRiver Retail signed up new tenants for its redevelopment of The Forum in Newcastle, and the shares were 3p better off at 202p.
Panmure Gordon's Philip Dorgan issued a more cautious view on the handbag maker Mulberry after its profit warning last week. He downgraded his 2014 and 2015 pre-tax forecasts by 15 per cent and 21 per cent, and reduced the target price for the shares to 950p. He retains his hold rating and the shares bagged another 10p loss to 999.75p.
Central Asia Metals, a copper producing group with a focus on base metals in Asia, reported full-year results and its shares shone 19p to 128p.
Snap up shares in Sweett Group, Charles Stanley insists. The analysts like the only UK-listed quantity surveyor as it has a "contracted order book" of more than £100m "for the first time in its history" with 67 per cent generated overseas and 33 per cent from the UK. The analysts rate it a buy with a 34p share price target and its shares were 23p.
Flog shares in the broker Icap, Canaccord Genuity urges. Analysts there point out that its full-year 2013 pre-close statement yesterday reminded investors that "trading conditions for the nine months … were extremely challenging." They rate the shares, which are currently 302.3p, a sell with a 300p target.
Hang on to shares in Chilean copper miner Antofagasta, Fox-Davies suggests. Its analysts have upped their rating to hold from sell, with a share price target of 1,015p, up from 981p. The miner's results earlier this month were good but it has a major feasibility study under way, due for completion in early 2014, so hold the shares for now, they say. The shares were 1,025p.
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