THE TIPSTER
RECENTLY downgraded to “hold”, investors have not been deterred from Dragon Oil which will be publishing interim results tomorrow. As the crisis in the Middle East unfolds, and stop-gap governments evolve, oil prices, which have seen a correction since last week, should carry on rising and the sector continue to perform. Cantor Index offers a daily spread of 552.3p-554.3p.
Defense company BAE Systems has been falling despite reporting full year earnings in line with expectations. Government spending cuts in the UK and US will affect the company; however, it ought to be able to develop or grow fresh sources of revenues in other countries, including Saudi Arabia.
Although investors have become nervous, it should be noted that BAE still managed a pre-tax profit of £1.49bn in 2010 against a £61m loss in 2009. Capital Spreads quotes 335.6p-336.2p.
Lloyds and RBS got a boost last week after positive broker recommendations. RBS shares have shot up some 16 per cent since 1 February, with Lloyds shares lagging behind with only a 8.3 per cent gain.
This has opened up a pairs trade opportunity to sell RBS shares and buy Lloyds, as the pairs spread is out of line with historical levels. One to watch, with Lloyds expected to report healthy earnings on Friday. Spread Co offers a spread on Lloyds of 68.60p-68.72p and RBS of 48.34p-48.46p.
XP Power is reporting on Monday and the price is up 3 per cent ahead of the figures. WorldSpreads is quoting 1,534.1p-1,561.9p in the Rolling Market.
After announcing a fourth quarter loss a couple of weeks ago, German pharmaceutical company Merck is expected to post its full year profits today and investors will be keeping a close eye on guidance for 2011. CMC Markets is offering a spread of €62.593-€62.737.