Sunday newspaper share tips
13:52 GMT, 6 May 2012
13:52 GMT, 6 May 2012
'Avoid': Too many risks attach to RBS shares, according to the Telegraph's Questor column
We round up the stock picks from the Sunday business sections.
Threats that could depress profits at the part-taxpayer-owned RBS are numerous, says the Questor column.
Potential downgrades by credit rating agencies would hit the business hard and resurgent eurozone debt problems could see more loans go bad.
RBS isn’t heavily exposed to government debt in troubled countries, with about 300m of exposure, but its levels of personal and business loans are significantly higher.
Last week, the bank was forced to set aside yet another 125m for payment protection insurance (PPI) mis-selling but first-quarter results were not too dreadful.
RBS also confirmed that it would pay back the last of a 75bn chunk of UK government-backed funding it received during the credit crunch.
The shares at 24.47p are nowhere near the 50p level that the Government needs to break even: there might be a long wait for the shares to double.
The resumption of dividends will not happen for at least a year and there is still much to do with the 'bad bank'. However, at current levels, the shares should be avoided as there are safer homes for your cash.
Occasionally, a glaring anomaly arises particularly with a small PLC that falls below most investors’ and analysts’ radar: private investor John Lee believes Aim-quoted Christie Group to be a classic example.
Christie has steadily developed over the years and is highly regarded within its two principal sectors: professional business services, covering valuing, buying, selling, financing a wide variety of businesses in the leisure, care, retail sectors; and stocktaking and inventory systems and services.
The stocktaking business – number one in the UK, number three in the world, with 11 offices and more than 1,000 employees – has roots going back to 1846. But new clients include Zara, Butlins, Tesco Pharmacy.
Total group revenue increased to 53m for 2011, split broadly equally between the two divisions. With directors and staff owning 65 per cent, marginal profitability and a recent dividend reduction, the shares have come back to 52p, giving a paltry 13m capitalisation. 'So I recently added more at 49p to my already sizeable holding,' says John Lee.
A trade buyer might value Christie at 1 for every pound of turnover – 50m-plus – or four times its present market valuation. But even a more conservative calculation makes a mockery of the present share price.
Indeed, the group floated at 145p in 1988, when it was considerably smaller.
FINANCIAL MAIL ON SUNDAY
Waterlogic has pioneered a way to make tap water free from germs. Its unique process works all over the world, even in countries where tap water is normally dangerous to drink.
The company listed on the Alternative Investment Market last July and brokers believe profits will soar over the next three years, making the shares worth a look…
>> Read the full MIDAS column here.
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