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Tuesday newspaper share tips: G4S, AB Foods

By Alexander Bueso

Date: Tuesday 13 Sep 2016

Tuesday newspaper share tips: G4S, AB Foods

(ShareCast News) - Shares in G4S have had a good run but they are not worth holding and much less buying, The Daily Telegraph's Questor column said.

On the positive side of things, the security services providers' rate of organic growth improved significantly over the first six months of the year to 5.1%.

The outlook for the US market was also quite positive, with the company likely to benefit from increased security concerns in such uncertain times.

Emerging market growth should also surpass that of developed markets, the tipster said.

Yet the company was continuing to struggle to reduce its debt pile.

Business in the UK may also be past its nadir, according to Questor.

However, weakness in sterling cut both ways, lowering the bill for costs but making it more difficult for the outfit to pare its debt pile.

It was also still being weighed down by onerous contracts and rogress to date on disposals had also been slow, although it was expected to announce a sale of its Israeli business over the next few weeks.

The harm which past scandals had inflicted on its reputation was another factor to contend with.

"Despite some good fundamentals, G4S is probably not a long-term play, and Questor sticks with its previous recommendation from March of sell."

Associated British Foods can weather the storm from Primark's disappointing sales results on Monday, according to The Times' Tempus column.

The diversity of ABF's business is key for Tempus' Tom Knowles, as strong results in one area of the business often cover up struggles within another.

The sugar division was once the troublesome aspect for ABF due to plumetting global prices, but the company's latest update showed it was big-hitter Primark which had hit an uncharacteristic speedbump, with the company admitting full-year like-for-likes could fall by as much as 2%.

Sterling weakness would also weigh on the firm's margins, but if anyone can ride out the relatively small storm, then Primark can, according to the tipster.

"Only half of its revenue now comes from the UK and even though comparable sales are down it has still gained market share in Britain during the period. Expansion into Europe is on track," Knowles said.

Businesses that are worse-run than Primark would be affected more by the currency difficulties, according to Tempus.

"Primark is a very well-run business that keeps a keen eye on overhead costs and, with ABF's strong balance sheet, it has more more than a little ballast to weather the currency storm."

So while ABF has a tough year ahead, Tempus recommends 'HOLD'.


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