Friday tips round-up: Petrofac, DS Smith, Micro Focus

The big bet for Petrofac this year is on Turkmenistan. The oil and gas services company is already seen by the market as a safe haven while fallout from BP's disaster in the Gulf of Mexico buffets oil stocks.

Its share price-earnings ratio is set to be about 17 times this year dropping to 14 next. Add in the potential in Turkmenistan, not to mention the opening up of Iraq, and even a 240p price increase since January does not detract too much from the stock's attractions. Buy says the Independent.

Packaging group DS Smith appears to be gaining market share, and there are signs of improved demand. Achieving sales growth in packaging has traditionally been difficult. However, the scope for the company to return cash to shareholders should its ambitions falter should help to put a floor under the stock. At 122p, up 1½p, or nine times earnings, and providing a 3.8% yield, stay on board says the Times.

Many of the metrics at DS Smith are now heading in the right direction. Its full-year dividend was up by 4.5% to 4.6p and its adjusted earnings per share rose by 2.4 per cent to 12.9p. Furthermore, the company's shares now trade on a price-earnings ratio of 11 times, which makes them look reasonably cheap. Buy says the Independent.

FTSE 250 software developer Micro Focus lost 13% of its value as it announced the resignation of Nick Bray, who effectively ran the company until a new chief executive came in last month. The company's's underlying sales of software licences were also lower than expected in the past six months of its financial year. Even so, the prospects for the company's niche — enabling old-style mainframe computers to run on new, low-cost hardware — look as sound as ever. At 460p, down 67½p, or less than 12 times current-year earnings, the shares are a buy says the Times.

The stock market has plenty of losers from BP's Gulf of Mexico oil spill but AEA Technology could be one of the winners. At 17¾p, or seven times earnings, the shares look appealingly cheap, and US momentum is a powerful draw. However, it remains difficult to recommend the purchase of a company whose pension fund deficit — about £140 million — is three times its stock market value. Pass says the Times.

Dart Group, which owns the budget airline Jet2.com operating out of Leeds Bradford airport, said yesterday that both profits and revenues were lower than last year's. But anyone expecting tales of woe will be disappointed. Shareholders will also take comfort from the fact that Dart maintained its dividend, with a decent yield of more than 2 per cent.It will be a bumpy ride but buy says the Independent.


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