Thursday tips round-up: GSK, Hochschild Mining, De La Rue

Announcing yesterday's second-quarter numbers, GlaxoSmithKline said it might start a shares buyback programme, which could help the share price. GSK has ruled itself out of any bidding war for the Durex maker SSL, which yesterday recommended a bid from Reckitt Benckiser. The stars are starting to align for GSK and, at these levels, the shares should not be missed. Buy, says the Independent.

Yesterday's quarterly production numbers from Hochschild Mining revealed a more-than-healthy 12 per cent rise in silver equivalent ounces (which tots up both gold and silver output) to a total of 6.8 million ounces. Goldman Sachs has the company on 12.9 times this year's forecast earnings, dropping to an attractive 6.8 next year. It notes the development of the Azuca and Crespo operations in Peru, coupled with further increases in the resource life of the company's mines. This could fuel the stock, so buy, says the Independent.

De La Rue's woes at its Overton plant in Hampshire, which prompted this week's precipitous plunge in its share price, fall within Donald Rumsfeld's "unknown unknowns". The share price fall may have been overdone, but De La Rue is the classic "falling knife" and BP watchers who took the same view during the Macondo disaster know just how sharp these can be. Only for the brave, according to the Times.

A trading update issued by Gem Diamonds on Monday was not as upbeat as Petra's. The shares fell after the announcement that saw the group reveal that first-half production in Australia missed company forecasts. Profits at the company should improve as the operation difficulties are resolved, but the rating remains a hold and investors wishing to play the diamond recovery should buy Petra, according to the Telegraph.

GKN's recovery from the dark days after the collapse of Lehman Brothers has been startlingly fast. There was a £423 million rights issue and the engineer closed 15 factories and cut about 7,000 jobs out of a total workforce of 42,000 worldwide. One concern overhanging the shares has been the pension deficit, which stood at £510 million at the year end; the shift to jobs overseas has meant a dearth of contributions in the UK. But GKN has moved to counter fears with a scheme to inject income from assets such as property and trademark revenue. The shares sell on less than ten times conservative estimates of next year's earnings and should have farther to run, says the Times.

The publishing industry has not been a great place to be during the downturn, but one business that fared relatively well compared to the rest was Euromoney Institutional Investor. Euromoney was not immune to the downturn but cost-cutting helped it to maintain margins and Investec has the stock on an undemanding 11.9 times forecast full-year earnings. Management have voiced concerns about uncertainties but Euromoney has shown it can trade through them. Buy, says the Independent.


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