Friday newspaper share tips: IAG, Serco

IAG´s maiden dividend marks its recovery from the depths of the financial crisis in 2008, when its precursor British Airways eliminated it. Many see that as vindication of the takeover of Spain´s Iberia and then Ireland´s Aer Lingus, with FinnAir expected to be the next target. It would give the company led by Willie Walsh an excellent base for flights to China and the Far East. The company also has a state-of-the-art fleet of fuel-efficient Airbus A350s about to arrive. An alternative would be to chase privately-held budget carrier Norwegian.

However, a dogfight with RyanAir would likely ensue. The Irish firm has already expressed interest in having routes to the States. From a business standpoint, easyJet should also join in the fray but the fact that Stelios Haji-Ioannou, the uncooperative founder, holds a third of the shares, is unlikely to help. Nevertheless, investors must keep in mind that this is a cyclical industry. The opportunities available to all three companies may be great but their stock is already near all-time highs. "It is hard to believe there is much more share price upside for any of them, take profits," says The Times´s Tempus.

There was a time when news of a big contract win by Serco passed unnoticed, but that was then. Now, it´s a rarity.

The outsourcing company won a 20-year, £300m tender to oversee delivery of Australia´s new Antarctic ice-breaker.

After a long period of silence since the company´s last big win, and despite company boss Rupert Soames´s warning when he came on board that the turnaround would be a long job, investors may have lost faith.

The evidence is in the slow but constant drip lower by the share price to new lows. The reason is simple enough, "which secretary of state would sign off on a deal with Serco without quivering at the thought of media condemnation?," said The Times´s Tempus.

Making matters worse, an investigation has started into its handling of the Yarl´s Wood immigration detention centre and there is talk that it could get sacked from the atomic weapons establishment contract.

So "leave [the shares] alone," as there are no signs as of yet of a real renaissance, Tempus says.