Wednesday tips round-up: Cairn Energy, Antofagasta, Petrofac...

Cairn Energy's new focus is Greenland, as the chief executive, Sir Bill Gammell, stressed yesterday.

The good news is that each new well gives Cairn buckets of new data. The bad news is that it could take more time than the market can bear before any major strike. Analysts at Finncap said yesterday: "These results should hit home that it will take a long time to fully understand the [Greenland] basin and could take many years to make a commercial discovery if at all." Hold says the Independent.

Antofagasta is generally known as a pure copper play. Almost all its output is copper and its share price is umbilically attached to the price of the metal on world markets. But it is increasingly looking like a pure China play too. A significant 15% of production ends up in China and with no signs of a sharp improvement in US or European housing markets, any downturn in the Chinese property boom would be bad news for Fags. The shares are well up with events says the Times.

There is no doubt that Petrofac shares are trading at a high rating. But you have to pay for quality. Petrofac had a net cash balance of $960.6m (£617m) at the end of the first half. This represents one-fifth of the company's market cap. The company also has an ever-expanding orders backlog, which should increase further in the second half of the year and hit a new record at the end of this year. Buy says the Telegraph.

Controls group Spectris's problem is that, looking ahead, economic prospects are getting grimmer by the day and, while part of Spectris's strength can be attributed to self-help measures instituted last year, it is clear that it benefited from improving cyclical trends in the first half of the year. On a multiple of 12.1 times forecast earnings for 2011, against a sector weighted average of about 11.7 times, hold says the Independent.

Spectris shares were well below 400p in March but have more than doubled since, though they lost 41p to 869œp to profit-taking yesterday. This puts them on about 12 times' this year's earnings. Buy on any further weakness says the Times.

Promethean World is a company that aims to bring the classroom into step with the iPad generation, offering technology such as tablets for students and electronic whiteboards for the tutors. The stock came under huge pressure again yesterday, falling 19.9% despite a generally well-received half-year trading statement. The longer-term trends and the company's solid fundamentals mean buying now could well pay off, so buy says the Independent.

Promethean trades at less than 12 times forecast earnings for 2010 and the stock looks undervalued. It may have lost its star status but the growth story remains intact and the current weakness could provide a buying opportunity despite the current volatility suggests the Times.


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