Tuesday tips round-up: Ryanair, Xstrata, Cranswick

Fares on flights will have to rise if the company is going to hit its targets, that's the warning issued by Michael O'Leary's Ryanair yesterday. This is, obviously, better news for investors than it is for its customers.

Currently, 11% of intra-European traffic is transported on the Ryanair fleet and there is plenty of scope for this to improve with the delivery of its new planes. There is a succession issue with chief executive Michael O'Leary, but the business model is clear. Buy says the Telegraph.

It produces copper, ferrochrome, nickel, platinum and zinc - but coal is still king for Xstrata, the FTSE 100's fourth-biggest miner. The fossil fuel stood out as the star of yesterday's full-year production report, with total coal output, a record 95.2 million tonnes, up 11% on the year.

Xstrata's near-term appeal is its leverage to commodity prices - copper and coal account for four fifths of operating profits - and output growth that exceeds nearly all of its peers. At £10.60, or less than ten times earnings, buy says the Times.

As Britons become more health conscious, they are also eating less red meat. Demand for pork over red meat is a continuing trend that should benefit Cranswick. The shares are trading on a March 2010 earnings multiple of 11.7 times, falling to 10.7 in 2011. This does not seem too stretched for a company that continues to show good growth. With the UK barely out of recession the company is trading exceptionally well. Shares in Cranswick remain a buy says the Telegraph.

Given that pig prices have been falling back, this means increased volumes are driving much of its growth. Further good news yesterday came from the unveiling of a joint venture with the TV celebrity chef Jamie Oliver to supply him with all the meat for his own range of fresh pork joints, marinated ribs, bacon and Italian charcuterie to be launched this spring in retailers. Cranswick looks set to continue bringing home the bacon. Buy adds the Independent.

Chain maker Renold has done a good job of getting its house in order over the last few years, although the benefits have been obscured by the downturn. That could change now that things are starting to pick up again, and trading on a forward multiple of just seven times full-year earnings, the shares sit on a very undemanding multiple. Buy says the Independent.

As equity markets have made a strong recovery in the last six months, contractor Galliford Try's stock has misfired, falling by nearly 20% in the same period. A rating of 14.5 times full-year earnings is not cheap. Hold says the Independent.

Recruiter SThree confirmed yesterday that it had started to hire staff for the first time in more than a year. At 312Œp, the shares trade at a steep-looking multiple of 30 times, and yield 3.9% . But, given SThree's gearing to further recovery, buy on weakness suggests the Times.

Juridica has first-mover advantage among a new breed of investment funds that seek returns through sponsoring commercial litigation. But Juridica is no longer alone. Burford, chaired by Sir Peter Middleton, the former Barclays chairman, floated last October, raising £80m, and Alvaro, led by Ian Rosenblatt, a City lawyer, is seeking £50m from a listing to back UK-only disputes. The market is developing but remains unproven. At 120p, await further progress before buying in says the Times.


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