United Utilities faces regulatory wrangling and rising interest rates, making its shares
no better than a hold, the Sunday Telegraph's Questor column said. The water company has reported rising profits, strong cash flows and dividend increases linked to inflation. But in future it is up against a regulator that could push for a harsher settlement on prices while equity could be squeezed when interest rates rise and increase the cost of United's £5.5bn debt. With shares close to their all-time high, now is not the time to buy.
US telecoms and television companies are merging, and the long-awaited joining of the two sectors is coming to the UK, Simon Duke said in the Sunday Times's Inside the City column. By combining TV, phone, online and mobile offerings, operators can tie customers to more profitable contracts for longer. But there are lots of questions hanging over how British consolidation will play out. BT could bid for ITV but that £10bn deal is some way off because BT has yet to prove it can make TV work. Vodafone has mulled a bid for BSkyB but Sky does not have a high-speed internet network. Sky is attempting to combine with its sister companies in Italy and Germany. There are more plot twists on the way.
Stick with pork producer Cranswick, the Mail on Sunday's Midas column advised. The company is gaining from renewed enthusiasm for British meat after recent food scandals. Exports are rising to China and elsewhere in Asia and to Africa were people like to eat cuts UK consumers do not like. Cranswick is opening an office in Shanghai to encourage Chinese consumers to eat more traditional British pork products. Last week's 6% rise in annual profits beat City estimates. Long-term investors may want to buy on short-term weakness.
Great Portland Estates remains a hold for long-term property investors, Questor advised in the Sunday Telegraph. The real estate investment trust's bosses think the recovery in London's retail and office property is only just beginning. Tight supply in central London is pushing up rents and prices, unaided by foreign buyers that are sending residential property soaring. Great Portland's portfolio rose in value by 18.7% last year and demand for West End offices pushed up rents by 8.2%.
Amara Mining is a buy for adventurous investors, Midas said in the Mail on Sunday. It has uncovered one of the biggest gold troves in Africa, a mine in Ivory Coast with about 6m ounces of gold. But the find has not fed through to Amara's share price because of volatility in the gold price and a two-year lag until production starts. The Yaoure mine is just two miles from a hydroelectric plant, giving a large water supply. Energy costs are three times lower than in nearby states. Amara will either take the site into production itself or be bought by a bigger gold producer. At current prices the shares are worth a punt.
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