Thursday tips round-up: Carillion, IPF, Arriva...

It's ten years since Carillion was spun off from Tarmac and two years since it formally dropped out of the FTSE construction sector. Yesterday's full-year results showed that Carillion generated £118m of profits in 2009 from support services, up from £20m ten years ago and accounting for more than half the group total.

Carillion has raised its dividend by 12 per cent, is debt-free for the first time in four years and, at 286Œp, down Œp, trades at a multiple that belies its transformation: less than eight times forward earnings and yielding a solid 5.1 per cent. An unqualified buy, says the Times.

The Independent agrees, believing there is much to trumpet in yesterday's annual results. A key factor is the group's 4 per cent margin - up from 3.7 per cent last year - within which the support services division was up at 4.9 per cent. The company signalled its confidence by hiking the dividend. We're confident, too. Buy, it says.

When International Personal Finance was demerged from Provident Financial three years ago, it was pitched as an opportunity to back the doorstep lender's high-growth emerging markets operation at the expense of its low-growth UK rump. But as yesterday's full-year results showed, recession has got in the way. The post-demerger record is patchy - hence the shares, at 198p, trade at only eight times 2010 estimates, despite a forecast 40 per cent surge in earnings. A buy for the brave thinks the Times.

Yesterday's preliminary results from Arriva held few obvious surprises for the City. The shares have already shot up in recent weeks. Much of the interest stems from January's acknowledgement of merger talks with Keolis, which is part of the French railway group SNCF. Not only are the merger talks too uncertain to be worth the risk at this stage, but the massive squeeze in public finances loom large. Hold, says the Independent

It may seem that two-for-ones are everywhere you look when you decide you want to dine out, but The Restaurant Group is doing perfectly well without resorting to deeply discounted promotions. Adjusted pre-tax profits last year rose by 2 per cent to £50 million and comparable earnings were up 5 per cent at 17œp. Despite bad weather, recent like-for-like sales have remained positive, further proof of TRG's credentials. The shares, off 10p at 205p amid profit-taking, are trading on 11 times 2010 earnings. Hold on, recommends the Times.

The market has been hard on Lavendon, which supplies scissor lifts, van mounts, truck mounts and other aerial work platforms to maintenance contractors and the like. The company's steps to strengthen its balance sheet have led to what Investec termed a "big reduction in net debt". Not only have such moves helped Lavendon to weather the downturn, but they leave it well placed to capitalise on the upturn. Its shares, which offer a yield of 1.7 per cent, trade on multiple of just 7 times Investec's full-year forecasts. Investors appear to be ignoring Lavendon's focus on its finances and the diversity of its operations. The Independent says 'buy'.


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