Tuesday April 29, 06:57 AM
Tuesday tips round-up: Stagecoach, Highland Gold, ASOS
LONDON (ShareCast) - One of the main concerns for bus and train group Stagecoach is the seemingly unstoppable price of oil. Even with 95% of fuel costs hedged in the UK for 2008, the group faces an additional £27m bill this year. If spot
prices stay at today's level, fuel will cost the group another £27m in 2009.Stagecoach has clearly emerged as a good company after struggling in the early part of the decade, but investors without money in the group already may have missed the ride. Hold says the Independent. The Times adds that it is reasonable to assume that Stagecoach's revenue growth will slow: although sizeable City job cuts have yet to be made, it would appear to be only a matter of time before London commuter volumes begin to suffer. However, taking profits at a time when profit forecasts are still rising feels premature. Hold on. The shares trade on around 12.5 times, yielding about 1.9%. Given the growth, cash generation and strong balance sheet, stay aboard says the Telegraph. Online fashion retailer ASOS (LSE: ASC.L - news) 's shares are worth double their value six months ago. The shares trade at 25 times next year's earnings, which may seem pricey, but not once the pace of earnings growth, high operational gearing and strong position within its niche are factored in. Hold on says the Times (1832.HK - news) . The Telegraph disagrees, suggesting that on a rating of 27 times, ASOS shares look very expensive - even given the group's phenomenal sales growth and its younger customer base that is less affected by the credit crisis than others. Sell it says. Highland Gold was an also-ran until December last year when Chelsea owner Roman Abramovich invested $200m, which helped to net profits in 2007 of $18.1m. In January, Abramovich shelled out another $200m, taking his holding to 40%. Conservative investors may consider Highland a bit of a punt; it does have only one operating mine at present, but the price of gold is showing no signs of weakening, Hold says the Independent. A host of new partnership deals appears to put Highland in the position where it can finally move on to its next stage of development at a time when output and prices are forecast to continue their rise. Buy says the Telegraph. Given Highland shares's recent strength and the two years until Maskoye comes good, the shares are up with events. Pass says the Times. Itis provides provides real-time transport updates to the providers of navigation systems and local radio stations. Growth in the UK market will slow in the next few years but that investors can expect great things from the group's overseas operations, particularly in the US, where it has signed several licensing agreements. Buy says the Independent.
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