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Sunday share tips: Premier Foods, Rare Earth Minerals, Bunzl

Date: Sunday 19 Oct 2014

Sunday share tips: Premier Foods, Rare Earth Minerals, Bunzl

It could be the a good time to buy shares of Premier Foods, Danny Fortson argued in his Sunday Times column, Inside the City. The company, whose brands include Oxo and Mr Kipling, took on too much debt before the financial crisis but Chief Executive Gavin Darby has fixed its structural problems. He has cut debt payments, spun off the ailing Hovis business and struck a deal with pension trustees. The company is not yet "normal", as Darby has claimed, and third-quarter trading could look grim when the company reports on October 23rd but the bottom is probably not far off.
Rare Earth Minerals is an attractive prospect for adventurous investors, Midas said in the Mail on Sunday. Lithium is in high demand and the mining company owns a third of a new lithium project in Mexico. The mine is in a part of Mexico favorable to the industry and fairly close to a new battery plant built by Tesla, the US electric car company. Some "canny observers" think a tie-up between Rare Earth and Tesla could happen quite soon. Rare Earth shares trade at 1p but there are 5.7bn of them, valuing the company at £57m. The long-term outlook for Rare Earth is sound.

Hold shares of Bunzl, the distribution group, for long-term value, Questor said in the Sunday Telegraph. Bunzl posted a steady trading update last week. Its products, from bags and stationery for retailers to latex gloves and face masks for cleaners and surgeons, tend to be thrown away. The company expects to meet annual profit expectations, despite being hit by the strong pound. It generates cash and is a good defensive stock. The shares are pricy but existing shareholders should stick with Bunzl.

BG Group has reached a defining moment with the expensive hiring of Helge Lund as Chief Executive, Danny Fortson said in the Sunday Times. The Inside the City columnist said the £29m package to lure Lund from Statoil flouted corporate governance conventions but Chairman Andrew Gould was denied his first choice candidate last time over pay and the outcome was not good. Chris Finlayson quit as Chief Executive in April after 14 months. It's a slippery slope to give in to Lund's demands but Gould can say: "Look what happened last time."

Wolf Minerals owns the first mine to open in the UK in the past 33 years and shareholders should stay with it, Midas said in the Mail on Sunday. The recent weakness in Wolf's share price, as part of a general sell-off of miners, is not justified. The shares have fallen since Midas recommended them in January 2012. There is more demand than supply for tungsten, which Wolf mines. The share price should rise even though the company cannot pay dividends for three years. Existing shareholders should hold and new investors are likely to find value at today's price of 13.375p.

Connect Group caught investors' attention when it announced a deal to deliver goods on the day of order for Amazon, using its existing fleet of vehicles that transport newspapers and magazines to newsagents. The company is profitable and generates cash despite the decline of print-based news. The news and magazine delivery business still makes up 84% of revenue but Connect is expanding its non-print business. The shares have fallen 35% since their January peak and have a forecast dividend yield of 7.2%. Market expectations for financial performance do not look demanding so hold on to the shares, Questor says.


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