Wednesday tips round-up: Croda, Mondi, Spice

Chemicals group Croda is emerging from recession with earnings nearly twice the level they were when it went in. Strong profit growth has also pulled net debt down by £110m to £289m.

The only negative in yesterday's numbers was the effect of lower discount rates on Croda's pension deficit, which has widened further - to £204m - since the half-year stage. On 14 times current-year reason, there is every reason to hold says the Times.

Whatever happens in the short term, the company's green offerings are likely to do well as consumers increasingly opt for eco-friendly products. The valuation is also supportive, with Croda trading on a multiple of 13.4 times UBS's full-year forecasts. These numbers, and the momentum in the consumer care division, more than offset any serious concerns. Buy says the Independent.

Outsourcing group Spice blamed the weather and the end of the regulatory cycle in a number of its businesses were to blame for missing 2010 profit expectations. There is no good reason to be in this stock until there is real evidence of improvement. Sell says the Independent.

The boost from yesterday's update from paper group Mondi is that both volumes and prices are now on the rise. The case from here rests on Mondi's status as one of the world's lowest-cost paper makers with exposure to high-growth emerging markets, especially Russia and Eastern Europe. At 379œp, or 12 times 2010 earnings, it is not too late to buy says the Times.

Petra Diamonds should bank a sizeable chunk of cash when it sells the prime family jewel - a 522 carat stone - at the end of this week. Petra has some good quality mines already producing valuable stones and believes that an increase in production is possible from its present assets - Cullinan, Koffiefontein, Williamson and Kimberley. Buy says the Telegraph.

Elephant Capital is an India-focused private equity fund, and, as such, has not had an easy time of it over the past year. The discount to net asset value is substantial enough to look worrying as much is it offers an opportunity. Only speculative investors should buy says the Independent.

Spectris is benefiting from stimulus spending, both on infrastructure (its gadgets are used in cement-making) and education (such as laboratory equipment used in academic research). But with 28% of sales now drawn from Asia, it should be only a matter of time before stronger recovery feeds through. At 791œp, down 3œp, or 14 times 2010 earnings, hold on says the Times.


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