CABLE & WIRELESS had a stonking session yesterday and as the year draws to a close the telecom carrier is pretty much assured to end 2003 as the best blue-chip performer. Cable & Wirelessshares are up nearly 200 per cent since the start of the year and yesterday they rose 8.25p to 134.75p after its broker, ABN Amro, told investors that the stock remains cheap.
C&W have come under selling pressure since the group announced its much talked of exit from the United States. ABN believes the selling has been caused by institutional investors reducing their exposure to volatile stocks such as C&W ahead of the end of the year, and argued this creates a great opportunity for those investors on the hunt for bargains.
The Dutch broker makes a good point. At yesterday’s close, the telecom group is valued at pounds 3bn. However, it boasts a cash pile of pounds 1.3bn and finds its shares trading at just 11 times next year’s earnings, according to ABN estimates. This leaves C&W with plenty of room to either raises its dividend payments or embark on a major share buyback programme, says the broker, which is of the view that the shares should trade closer to 148p.
Meanwhile, the FTSE 100 index finished the week on a positive note, rising 15.0 points to 4,412.3, thanks to a positive start to trading on Wall Street. Dixons fell 2.5p to 136p after Deutsche Bank downgraded the UK’s largest electricals retailer to “hold” from “buy” after Thursday’s Competition Commission report into extended warranties. Deutsche suggested the outcome is not one that Dixons would have hoped for, but is certainly not the outcome that the company feared.
Woolworths, up 1.5p to 44p, got a much needed boost from JP Morgan. The US broker started coverage of the retailer with an “overweight” rating and slapped an ambitious 56p fair value target on the stock. Now is without doubt a dangerous time for a broker to be tipping Woolworths, given the group generates the biggest chunk of its profits over Christmas. JP Morgan conceded this point but argued the stock’s potential upside easily compensates for this risk.
“We believe Woolworth’s represents good value, even without a roll-out of its new stores,” argued the broker. It believes efficiency gains from further logistics enhancements and supplier agreements should boost the group’s bottom line by 20 per cent per annum going forward. Market gossip on Woolworths has been pretty much all negative over the past two weeks with dealers reporting talk of weak trading at the retailer in the run up to Christmas.
Informa put on 23p to 325p after UBS upgraded the stock to “buy” from “neutral” and raised its price target to 375p from 320p. UBS justified the upgrade by pointing to recent upbeat statements from Informa’s competitors, namely United Business Media. The broker also applauded the group’s most up- to-date acquisitions, which it believes have greatly enhanced the quality of its portfolio of assets.
Croda International gained 10p to 257p as David Dunn, a non- executive at the chemicals group, disclosed the purchase of 4,000 shares at 248p. There was some interesting data on director share dealings from financial information provider Knowledge Technology Solutions. The company found that there were 3,505 director share purchases worth more than pounds 70m during the six months to 12 December and 804 sales valued at a staggering pounds 437m. The research also reveals that the leisure, entertainment and hotels sector had the highest value of sold shares by directors, over pounds 71m in just 47 transactions.
Scipher, the technology developer, was unchanged at 3.5p despite the purchase of 100,000 shares at 3.2p by Rudolph Burger, the group’s chief executive. The buying follows disastrous interim results from Scipher earlier this week, which caused the company’s shares to halve. Lansdowne Partners, the hedge fund which recently registered an impressive return on its investment in Manchester United, disclosed a 3 per cent stake in oil explorer Regal Petroleum, down 0.5p to 120p.
Turbo Genset put on 0.5p to 33.5p after securing a pounds 1.4m order for its power electronics division Intelligent Power Systems. There was more good news for Mondas shareholders as the software group unveiled yet another contract win from a major bank. Its shares rose 4.5p to 38.5p after signing a deal with Credit Suisse First Boston. Word has it things are going well at LA Fitness, up 9.5p to a new year high 162p. Market gossips hear new customer numbers are up 12 per cent for November and December. Vega rose 7.5p to 152p on talk it is close to securing a contract with The Netherlands’ ministry of defence.
Clapham House Group rose 4p to 117p after unveiling the acquisition of the Real Greek Food Company in a deal worth up to pounds 8.7m, depending on its performance. Clapham House floated last month with the aim of buying up branded restaurant formats in and around the London area. The group is led by David Page, the former PizzaExpress chief executive. SCI Entertainment ticked 1p higher to 125.5p as the computer games developer launched Conflict: Delta, the Japanese translated version of its Conflict: Desert Storm title.
