Baby Ace: SUNDAY NEWSPAPER SHARE TIPS: Ideagen, Next and Tesco

Sunday, March 16, 2014

SUNDAY NEWSPAPER SHARE TIPS: Ideagen, Next and Tesco

By

This Is Money

We round up the Sunday newspaper share

tips. This week: Ideagen, Tesco and Next

Tips: SSE and Premier Oil feature in this Sunday

Mail on Sunday

Software group Ideagen is one of a select number of firms that stand to benefit as the NHS seeks to put patient records online.

After

abandoning the previous costly attempt to create a single system for

all hospital and GP surgeries, the Government is now encouraging NHS

trusts to adopt systems individually.

AIM-listed

Ideagen – which specialises in IT systems for complex or highly

regulated sectors, including healthcare, manufacturing, pharmaceuticals,

aerospace and defence – is expected to announce two major contracts

imminently with Birmingham Children’s Hospital Trust and the Heart of

England Trust.

The latter comprises four hospitals and is one of the biggest in the country.

Ideagen

has already started to implement software systems at other English

trusts and further contract wins are predicted this year and next.

The

Derbyshire-based group counts other clients including Airbus, the RAF

and BAE Systems, as well as energy provider npower’s German parent RWE.

But NHS trusts are seen as offering the greatest potential for growth.

The company was chosen as Scotland’s

preferred supplier two years ago to put patient records online for all

14 Scottish trusts and since then it has won seven more NHS trust

contracts, including Guys St Thomas’ in London.

Chief

executive David Hornsby has helped Ideagen become profitable since

taking on the top post in 2009 and in January it announced a maiden

interim dividend of 0.05p.

In

the year to April 2013, turnover was £6.5 million and profits £1.9

million. This year, analysts forecast turnover of £9 million, profits of

£2.6 million and a 0.2p dividend.

With

200 NHS trusts in England, there is a vast market for Ideagen to tap

further into and as the health system now recognises the benefit of

smaller, more flexible IT companies, it is ideally placed.

At 33p each, investors are advised to buy shares and watch them grow.

Sunday Times

Shareholders of fashion retailer Next are set fair, says the Inside the City column.

Next has bought back shares every year since 2001 and it has taken one-fifth of its stock off the market in the last five years.

The scarcity of stock — and surging profits — led to a fivefold increase in the share price.

But

Next has shifted its plan. As long as the stock is trading at such

elevated levels, chief executive Lord Wolfson believes it makes more

sense to spend the money on special dividends instead. The company paid

its first one of 50p this month. Another is coming in May.

All the above is, of course, great news for investors.

Of all the retailers that the asset

manager Investec covers, Next is the most profitable, with margins of

nearly 19 per cent. Analysts expect about £700m in profits for the year,

up from £620m in 2012.

Wolfson

has plenty of incentive to keep up the momentum. He owns £100m of

shares and is on an incentive deal that last year paid him £4.6m.

The

more profitable Next Directory mail order and online arm, meanwhile, is

booming, posting an annual earnings increase of 13 per cent.

If

you are not already an investor, don’t pile in hoping for big gains.

But if you are happy with a more modest increase in underlying value,

this is for you.

Sunday Telegraph

The Questor column takes another look at Tesco.

It

asks how much longer the supermarket giant that commands 28.7 per cent

of the market can sit on the sidelines and refuse to cut prices.

That market position is declining, down from 29.6 per cent a year ago, and nearly back to the level of January 2005.

Tesco has room to cut prices, says Questor, as the company has the lragest profit margins, at about 5.2 per cent, of its rivals.

Tesco

has promised a £200m price reduction in milk and cucumbers but could go

further and match Wm Morrison’s £1bn of reductions. But cutting prices

further would lower profits.

The

supermarket is one of the most reliable income stocks in the FTSE 100.

The company is expected to hold the 14.8p per share full-year payment,

giving investors almost £1.2bn in cash.

Tesco

is saving cash by reducing new store openings and the balance sheet is

also strong. However, spending money on improving the existing store

estate and cutting prices will reduce profits and earnings, increasing

the risk around dividend payments.

Questor

has concerns that the profit downgrades may have further to run. With

no change in the fundamentals, Questor reiterates its advice to sell.