Tips round-up: BAE Systems, Fidessa, Telecom Plus

Yesterday's confirmation that BAE Systems has failed to win the follow-on contract for the US Medium Tactical Vehicles (MTV) programme sounds like bad news, particularly as it will leave a £592m impairment in its annual accounts, to be published on Thursday.

However, the real prize is the growing US defence market, where BAE already makes more than half of its revenues. Taken together with the end of the SFO uncertainty, and trading at less than 8.5 times forecast full-year earnings, BAE is a strong buy says the Independent.

Fidessa, a world leader in developing share-trading software for investment banks and fund managers - said yesterday that underlying sales growth was likely to slow from the 17% achieved in 2009 to closer to 10% this year.
But Fidessa has a track record of loading its stock market statements with caveats and yesterday's update was little different. The shares, up 122% in a year and within a whisker of their ten-year high, took them in their stride. The shares have long traded at a premium to the software sector and, at £13.30, or 21 times 2010 earnings, not much has changed. But a strong balance sheet and still fast-growing profits give reason to hold says the Times.

What will have grabbed the attention of investors, however, was its special dividend of 40p per share, which sent the stock into positive territory. Investors have made barrow-loads of money out of Fidessa in the past 12 months, with the stock putting on nearly 110%. Hold says the Independent.

Utilities reseller Telecom Plus will increase its full-year dividend by 25%. The oddity is that profits are heading at the same pace in the opposite direction - such that the planned 22p-a-share payout for the 12 months to March 31 will not be covered by earnings. Telecom Plus is in a transitional phase. Current-year profits have been hit by spending on property, technology and recruitment that should fuel growth. Revenues are up by nearly a third this year - and are forecast to carry on rising. At 301p, a hefty prospective dividend yield of 7.3% is enticing. Neither does a forward multiple of 11 times next year's earnings look too dear. But prospective investors should await full-year results in May.

As long as Frank Timis remains a substantial minority shareholder in Regal Petroleum, it will be difficult for the AIM-listed gas producer to draw a line under its colourful past. Regal, though,a t 76Ÿp, Regal is trading at about $2 a barrel of reserves - against about $8 for JKX Oil & Gas, its closest London-listed peer. A high-risk buy says the Times.

Playtech's acquisition of Virtue Fusion looks the more attractive given the opportunity for cross-selling between its poker/casino and bingo clients. Even after the shares' strong recent rise, they are still more than fairly priced at 12 times 2010 forecast earnings. Keep buying say the Independent.


Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.