There is one undeniable reason to hold British Airways shares. Investors are entitled to a 10% discount on its fares, and this perk is being maintained and even extended to Iberia routes once the two are formally merged in the new year.
The shares, at 265p, now sell on less than ten times the next financial year’s earnings, though its cyclical nature means it it is preferable to look at average earnings over the previous five-year cycle. The shares are on about 20 times these. Given the potential for upset, this looks unjustifiably challenging says the Times.
Brokers forecasts put African Barrick Gold at under 10 times forecast earnings for next year. That compares with nearly 13 times for other UK-listed gold and silver stocks. ABG is more than pricing in any risk of a short-term fall in the gold price. Added to its growth prospects, this is a buy says the Independent.
Phoenix IT offers its business clients outsourcing services and is well placed for what it says is “the move to a new era in IT infrastructure, sometimes known as the cloud”. The price-to-earnings rating of the stock is an undemanding 7.7 times estimated earnings in 2011. Buy says the Independent.
Phoenix shares have always been poorly rated by the market, on well below ten times’ annual earnings, because of its overhang of debt. But with borrowings now down to a more comfortable £63.5m, the company has stepped up the dividend and they now yield approaching 5%. Buy for an eventual rerating adds the Times.
Playtech is a business-to-business outfit that provides the infrastructure for firms offering gaming products, such as online poker and bingo. The Playtech model works. At 16.5 times 2011 earnings, it’s not cheap. But it offers great exposure to the growth of online gaming with none of the risks. Keep holding says the Independent.
Component distrbutor Acal swung back into an underlying operating profit of £2.8m, from a £1.8m loss last time. Much of this is already in the share price, which has risen a pound or so since the start of the year and now stands at 240p, putting the shares on about 18 times’ this year’s earnings. Hold; not worth chasing at this level says the Times.
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