Newspaper Tips & Round-Up

LONDON (ShareCast) - GlaxoSmithKlein should be a dead cert buy in the current climate. The twin drivers of the recession, which normally favours pharmaceutical companies, and swine flu, for which GSK has one of the only two recognised antiviral treatments, Relenza, should guarantee investors favourable returns over the medium term.

Shouldn't it? Unfortunately the markets are not so simple. Unless you are looking for a pure income play, the Telegraph thinks GSK is best avoided at present.

Currently Sportingbet (LSE: SBT.L - news) is priced at 10.4 times forecast full-year earnings. It is pretty good at bookmaking, but that is high enough given that it is an offshore operator with a high degree of regulatory risk whose earnings are not showing a great deal of growth. Collins Stewart (LSE: CLST.L - news) notes that its top line has been flat for fully six quarters. Given all this, those wanting exposure to the gambling industry should seek greener pastures. Sell, says the Independent.

Last week's half-year production figures from Rio Tinto (LSE: RIO.L - news) were always going to be a hard act for its erstwhile merger partner to follow and so it proved. Not that BHP Billiton (LSE: BLT.L - news) 's numbers were bad. Rather, the performance of its iron ore operations could not help but look weak next to its rival's forecast-beating display.

However, the broader attractions of BHP remain. As a financially strong and diversified play on a recovery in commodities demand, with the additional momentum provided by its exposure to oil and gas in the Gulf of Mexico and Australia, where about two thirds of its exploration budget is being directed. At £15.02½, the shares, have risen more than 16 per cent since January to trade at 13 times next years earnings but should have farther to go. Hold on, says the Times (1832.HK - news) .

Investors in Galiform (LSE: GFRM.L - news) , the group behind Howden kitchens that are sold directly to small builders, got a boost yesterday as the group published its first-half trading update. Notwithstanding yesterday's share price jump, the discount is still significant, according to analysts at Numis, who argued before yesterday's update that "at the current share price Galiform trades at a 20 per cent plus discount to the merchanting peers on price earnings and enterprise value to Ebitda metrics (adjusting for the MFI legacy), which in our view is clearly illogical". The Independent agrees that the group is a better bet than that and would still buy the stock, in spite of yesterday's price increases. Buy.

The Telegraph adds that the DIY sector is also heavily tied into the housing market. This is set to improve over the next few years, which can only benefit home improvement retailers. Buy.

Euromoney's revenues are far less cyclical than when financial markets turned down at the turn of the decade, largely as a result of the purchase three years ago of Metal Bulletin, the commodities specialist, which reduced its capital markets exposure and took more stable subscriptions from a quarter of revenues to nearly a half. Profits are also protected by a highly variable cost base. But at 232p, or eight times next year's earnings, and with the key test of September's seasonally important sales still ahead, stand aside for now, says the Times.

Sinclair Pharma (LSE: SPH.L - news) , the speciality dermatology and oral healthcare group, issued its full-year trading statement yesterday, saying that Ebitda is up, and thanks to its "decisive and proactive steps to restructure and streamline the business," costs have been reduced, while the depth of management expertise has been increased. The group argues that significant product launches this year should help the stock, and the Independent would give Sinclair the benefit of the doubt, for now. Cautious hold.

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