Mindful Money’s Monday share tips: ITV, Compass, Vedanta Resources, Aviva

12th May 2014


Investors will be eager to hear what prospects the FIFA World Cup will bring to ITV later this year when the broadcaster updates the market this week.

Ahead of the firm’s first quarter trading update on Wednesday and despite a near 50% share price hike over the past year, many brokers remain bullish on the firm’s outlook – last week JP Morgan Casenove upgraded its recommendation on the stock to ‘overweight’.

Prior to the announcement the consensus opinion is pointing towards a ‘strong hold’ says Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers. He adds: “Net Advertising Revenue is expected to prove robust, whilst the World Cup should support the second quarter outlook.

“The re-balancing of the business towards non-advertising under the group’s transformational plan is likely to remain a theme, with bolt-on acquisitions at its Studios business potentially aiding performance.”

The world’s largest contract caterer Compass Group also reports its half-year results on Wednesday. The firm, which has enjoyed respective share price rises of 7% and 16% over the past six and 12 months, should continue to benefit from its exposure to the recovering US economy as well as growing outsourcing trends in emerging markets. Modest improvement in its European division may also contribute notes Bowman.

He says: “On the downside, strength in the pound is expected to have generated foreign exchange headwinds, while more stringent spending by the Australian mining companies continues to dampen sales for its Fast Growing & Emerging (Markets) division.

“In all, and with the company’s targeting of the 50% of the catering market which is not already outsourced supporting future growth prospects, analyst consensus opinion remains favourable in tone i.e. a ‘buy’.”

Thursday sees aluminium, copper and lead miner Vedanta Resources publish its fourth quarter results. The group, which has endured a 30% share price fall over the past year, has already announced record production levels during the financial year in key commodities such as oil and gas.

But since commodity prices have been subdued, chiefly as a result of a slowing demand in China, investors should not get too optimistic in terms of sales and profits.

While the market consensus has the shares in ‘neutral’ territory, Sheridan Admans, investment research manager at The Share Centre, is calling them a ‘buy’. He says: “Investors will welcome exploration updates from the Cairn India energy business. Furthermore, after mining bans were lifted, investors will welcome commentary on the resumption of production in iron ore in various states. Investors will also keep a close eye on the Vedanta’s debt, which is relatively high.”

Thursday also see Aviva deliver its latest interim management statement. Investors will be looking for an update on how debt reduction plans are progressing at the UK’s largest insurance group, which has witnessed its shares rise by more than 60% over the past year. “Other areas of interest will be cost saving, disposals and cash generation,” says Admans, who has the firm on his ‘buy’ list. He adds: “After the budget announcement to give retirees more freedom with their income choices or capital usage post 2015, investors will be interested to see what plans, if any, Aviva has to support their established and potential customers.”

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