UK Stocks and Share tips
Top
of the Tips: Share Recommendations 23/2/2007
Buy
Diageo
Diageo
have proved themselves masters at increasing both volume
and margins by moving products upmarket with skilful advertising.
This strategy seems to be paying off for the drinks group,
who are making substantial inroads into Asian markets and
are enjoying an 8 per cent increase in first-half gross
profits, generated by a 4 per cent increase in volume –
proof of the group's branding strategy in action.
Although
they are not particularly cheap at 18 times forecast earnings
for the year, they represent a good medium-long term prospect.
Buy,
says The Telegraph.
Sell
Alexon
The
clothing group has just failed to agree a takeover offer
and looks extremely vulnerable at present. Hot on the heels
of the collapse of department store group Allders last year,
in whose stores Alexon had a notable amount of floor space,
rumours suggest that Alexon is in some danger of losing
some of its floor space in the upmarket House of Fraser
chain – now under new ownership.
Although
Alexon shares offer a decent yield of 4.4. per cent, at
22 time forward earnings, they seem to be at too much of
a premium to the rest of their sector.
Sell,
says The Independent.
Bradford
& Bingley
In recent
years, Bradford & Bingley have reinvented themselves
as specialist lenders, focused on the lucrative but potentially
volatile buy-to-let and self-certification markets. Although
their figures currently look good, with pretax profits up
8 per cent, they could be extremely vulnerable to a weakening
or crash in the buy-to-let market.
For
that reasons, The Telegraph says that now is a good time
to sell and take profits.
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