Sunday newspaper share tips

By THIS IS MONEY
Updated:

 

Each week, we round up the main share tips from the Sunday newspapers. For the Mail on Sunday's stock picks read the Midas archive.

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Sunday Telegraph

Airline British Airways (223.5p) has cut costs savagely, managing to do so at the same time as cutting its debt mountain to the extent that it is now one of the best capitalised airlines around. It has also dealt with its pensions liabilities, leaving just the 10% margin hurdle to leap before it returns to the dividend list - something it has pledged to do this year.

Despite the T5 debacle, BA still controls the majority of slots at Heathrow. Times may be tough now, but the operational gearing of airlines is such that the pick-up when it comes, floods down to the bottom line.

Questor bought the stock at 289.5p in January, arguing that it looked cheap. Now on less than five times this year's earnings, it looks even more so. Buy.

D1 Oils (38p) has not had the best run of late. It announced last week that it would close all of its biofuel refining and trading operations. Instead it will concentrate on the 'upstream' business of growing biofuel crops in emerging markets, concentrating on oil from jatropha, a drought-resistant, inedible oilseed-bearing tree.

But the past problems have left it desperately in need of cash, and it returned cap in hand to shareholders again this week, barely a year after raising nearly £50m.

Questor is not convinced that jatropha is the answer. With management suffering from tarnished credibility we would advise environmentally minded investors to seek their green elsewhere. Avoid.

Shares in Havelock Europa, which specialises in fitting out commercial buildings and schools, have tumbled from a peak above 170p last May as the group suffered through its exposure to the troubled retail sector, despite a solid performance.

But the company appears to have learnt its lesson, replacing two key directors in a bid for a healthier 2008. The early results are promising, the group said this week that its education order book stood at £43.4m at the start of 2008, compared with £10m a year earlier.

While the retail climate is cooling, the group's continued relationship with majors such as Marks & Spencer, Boots and House of Fraser should provide some buffer. Shares trade at just five times forward earnings, making the stock look good value. Buy.

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Luxury wallpaper group Walker Greenbank this week posted a bumper set of numbers for 2007, with profits up 119% to £3.1m and revenues 15% higher at £62.5m. It said that so far this year trading was strong.

The group has spent the past few years investing in its core brands, which include Sanderson and Zoffany, and, with wallpaper coming back into fashion, the expenditure should soon pay off. Meanwhile the balance sheet has been strengthened with gearing reduced and a reduction in the net pension liability.

The market has pushed shares down to a level where they trade on just seven times current year earnings. Buy.

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