Thursday tips round-up: Thornton's, Lupus Capital, Alliance Pharma

Chocolate firm Thornton's shares are a perennial underperformer, above £2 in May 2007 but now, at 81œp, lower than they were at the start of 2009. The problem, as was made clear in May's profit warning, is the high street chain. Commercial sales in the first half to the end of June, that is, chocolates that Thorntons make for others, rose by 10 per cent, but in the high street operation, which represents about three fifths of the group, they fell by 3.7 per cent as customers stayed away and the company cut prices. Sell, says the Times.

Just as Tomkins, Greg Hutchings' first vehicle, slips slowly into the west after an agreed if controversial takeover bid, his latest, Lupus Capital, demonstrates the benefits of life without him. Lupus shares, 17œp at the start of the year, peaked at not far short of £1 in the summer, suggesting that most of the recovery is in there, and sell on more than five times this year's Ebitda. No reason to chase, according to the Times.

Alliance Pharma, an Alternative Investment Market-listed company, makes its money by buying, marketing and distributing a large range of licensed prescription medicines. And, on the strengthen of yesterday's numbers, the strategy appears to be working. Buy, says the Independent.

SQS, the German software testing group, posted half-yearly results yesterday, with adjusted pre-tax profits declining to EUR2.4m, compared to EUR2.7m last year. On Altium's numbers, SQS trades on a multiple of 9.5 times forecast earnings for this year. That falls to 8 times 2011 earnings. The prospective yield, on the other hand, rises from 3.6 per cent for 2010 to 4.8 per cent by 2012. The Independent says buy.

Hotel and coffee shop group Whitbread's sales rose 14pc in the first half, and like-for-like revenue increased 7.9pc. That was led by a 10.7pc rise in like-for-likes at Premier Inn and an 8.3pc climb at Costa. The shares are now trading at a price-to-earnings ratio of 14.2 times, and yielding 2.7pc. Morgan Stanley calls them "good value for a business with cyclical upside, strong growth prospects and an attractive market position". Buy, says the Telegraph.


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