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Share Centre adds two new stock picks

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Written by:
15/01/2015
Graham Spooner, investment research analyst at The Share Centre, explains why Clarkson and Imperial Tobacco have been added to the ‘buy’ list.

Clarkson

“As a leading provider of integrated shipping services, Clarkson provides a significant role in the movement of commodities and finished goods around the world. Despite market conditions and global demand remaining challenging, the performance of the group has been resilient and it has a solid balance sheet and cash position.

“In November the group acquired RS Platou, a Norwegian shipbroker and investment bank for £281.2m. This will significantly increase the size of the company and move it into marine investment banking and offshore services.

“We recommend Clarkson as a ‘buy’ medium to high risk investors with a balanced portfolio. The share price hit an all-time high in May 2014, but along with many other mid-caps fell over the second half of 2014, by close to 30%. This puts the group on a more attractive prospective p/e rating for 2015 of around 13.5.”

Imperial Tobacco

“We have upgraded our recommendation of Imperial Tobacco to a ‘buy’ due to the very healthy dividend, excellent track record of dividend growth, the growing success of alternative products and the possible revenue boost from improving US-Cuba trade relations.

“The company’s final results in November showed sales and profits in line with market expectations, with the group’s underlying performance boosted by better control of stock levels and good progress on cost-cutting measures. Despite a continuing decline in tobacco volumes there was a solid increase in sales in growth brands and the dividend rose 10 per cent.

“The shares trade on a 2016 PE of 13.3, which is still below that of most of the main peers despite a strong performance over the past year. The price to book ratio of 5.6 times is well below the average and the prospective dividend yield of 5.3 per cent is the best in the sector.”

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