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Friday tips round-up: RPC, Rio Tinto, DS Smith...

Fri, 17th Dec 2010 06:57

RPC Group has spent ten years wooing Denmark's Superfos Industries but has finally won the day after its rival agreed to a £205m takeover.Making soup containers for Waitrose and coffee capsules for Nespresso machines may have all the hallmarks of a defensive stock. But the Superfos deal has turned RPC into a play on the plastics market at a time when more packaging is moving away from glass and metal sources. RPC may appeal to investors who like stocks such as Bunzl and Rexam and still contains value. Buy says the Times.A profit warning from Goals Soccer Centres has been on the cards since the first snow began to fly, and so it proved as the company confirmed that the recent freeze would wipe £700,000 off its profit this year because it has not been able to open its pitches. The shares trade at modest 9.2 times this year's projected earnings, which is not a galáctico rating, and with the snow still falling and most football boots still in the kitbag, investors may have to wait until next season for glory. Avoid for now says the Times.Earlier this month Rio Tinto approved extra funds to boost its annual iron-ore production in Western Australia's Pilbara region. The announcement was part of a broader plan to expand capacity by more than 50% over five years. Soon after, we heard Rio was eyeing Riversdale Mining, the Mozambique focused coal miner, in what could end up being a $3.5bn (£2.2bn) deal. Both moves spring from the same factor: the growing demand for industrial commodities from fast growing countries such as India and China. On just seven times forecast earnings for next year, buy says the Independent.Paper and packaging group DS Smith is in the process of significant change and, should the group's new management deliver on its strategy, earnings are likely to rise substantially in the next few years. Smith now intends to focus on the recycled packaging business, targeting opportunities in fast-moving consumer goods. The group is partially withdrawing from its paper production business as costs rise. The shares are trading on an April 2011 earnings multiple of 12.5 times, falling to 10 next year. The Telegraph says buy.Laura Ashley shares have soared and now trade on 12 times forecast earnings. Despite the recent momentum, we think that Laura Ashley may struggle to match the recent rise in its share price next year, given the uncertain outlook for consumer spending in the UK. But it's worth holding says the Independent.Aim-listed Westminster makes technology systems for security and defence as well as fire protection and safety markets. Contract delays mean It faces an operating loss of £2m, but contracts were delayed not cancelled, and it is looking to boost business in less economically bruised regions like the Middle East. There could be an upside after yesterday's weakness. High risk, though, says the Independent. Speculative buy.The short-term outlook for iron ore prices is good, but with many miners launching expansion plans all over the world, prices are likely to temper in the medium term. However, Ferrexpo is a pure play on the European iron ore market and its aggressive expansion plans should support earnings. The shares are a buy says the Telegraph.A new Redstone may be emerging from the ashes of the old business, and first-half results, due today, will add a bit more context of where the company is going. However the numbers will mean little at this stage in its transition, and winning back credibility will take much more time. Now in IT services, Redstone represents a gamble and investors should buy only in the belief that the new team can quickly turn it around and sell it on while the going is good, which is a risk. Not for the faint of heart says the Times.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.
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