The fall in engineering company Babcock's share price is overdone, Danny Fortson argued in his Inside the City column in the Sunday Times. The fall was partly because of the rights issue to pay for the takeover of helicopter operator Avincis but investors also think Peter Rogers, Babcock's Chief Executive, has overpaid. Fortson said that Avincis has struck deals in recent months that will make the price seem better value. Babcock can also refinance Avincis's debt more cheaply. There could also be an announcement on March 31st about deals to maintain the Magnox nuclear reactors and London's fire engines. Fortson gives Rogers the benefit of the doubt.
of Electrocomponents and hold on to them, the Mail on Sunday's Midas column advised. After suffering during the recession, the electrical parts supplier is back on track and is set to publish an upbeat trading statement on April 3rd. The company has invested in e-commerce to make it easier for customers to order products. Smaller rivals that cannot compete on product range or delivery speed and have depleted stocks after struggling in the recession. The group should benefit from economic recovery and the increasing importance of electronics in everyday life.
EasyJet has been upgraded to hold by Questor in the Sunday Telegraph. The budget airline guided profit forecasts up last week, saying cost control and more customers paying to choose their seats had made results better than expected. EasyJet has got ahead of its rival Ryanair by charging for seat allocation and allowing customers to switch flights. Questor had advised selling the shares on concerns about slowing growth and price competition, advice it said was "poorly timed". The company has proved its pricing power.
Investors are too negative about Caracal Energy's announced merger with Transglobe, Danny Fortson wrote in the Sunday Times. Caracal operates in Chad while Transglobe's is in Egypt. Investors should welcome the spreading of risk as well as the combined company's growth opportunities but the shares have fallen 15% since the announcement. Sellers think Caracal boss Gary Guidry has diluted them when he should have increased production and waited for Caracal to be bought. But bank finance would have been costly for a company so exposed to the corrupt Chad regime. The Transglobe deal makes Caracal less risky.
Trifast is going in the right direction and should continue to do well after its shares rose 42% since Questor tipped them in August, the Mail on Sunday columnist said. The widget company has invested in quality control that has won the approval of companies it supplies, 40 of which are big multinationals. Chief Executive Malcolm Diamond thinks there is scope to sell more products to these companies and to expand through acquisition. The expected 75% increase in the 2014 dividend shows how confident he is.