Brokers' view: Arbuthnot

The dynamic duo of Nick Spoliar and Kate Moy waxed lyrical on the potential of mine operator Hargreaves Services. They argue that the ‘robust drivers’ propelling the business forward include the ‘requirements for energy commodities and efficient energy operations in the UK, Europe and now Asia’.

Furthermore, they insist that Hargreaves is led by ‘entrepreneurial, industry-leading specialists’ who hold a ‘strong, long-term strategy of supplying products and services which are needed by a wide variety of clients’.

Forecasting pre-tax profits of £47.8 million (EPS: 120.3p) on sales of £640.2 million for the year to May 2012, they rate the shares as a buy with a price target of £15.

Strong despite operational issues
Arbuthnot’s mining team of Gavin Wood and Richard Tonthat are big fans of South Africa-focused International Ferro Metals, rating the shares as a strong buy despite problems including ‘operational issues at its furnaces, cost inflation and a strong rand’.

Wood and Tonthat note that shares in the business have fallen 74 per cent since 2009 but that since the upgrade of a roof in August this year shares in the company ‘have outperformed both the Mining Index and ferrochrome price’.

They say they expect ‘further positive news flows’ regarding operations at its Sky Chrome mine while the weakening of the rand against the dollar should ‘help to enhance margins, cash flows and therefore valuations for rand-denominated companies such as IFL’.

Rating the shares as a strong buy, they identify a target price of 35p.