Sunday share tips: Lookers, Mondi, Benchmark Holdings

Shares in Lookers are worth holding, said the Sunday Times' Inside the City column. The car dealership group's industry is in the grip of big changes, including a move away from the high-commission pay structure of old, reflecting changes in the way people buy cars.

Roughly four out of five new customers lease vehicles using finance offered by the car manufacturers, with Lookers taking a fee for helping to arrange this and making the sale, around twice the leasing levels even just five years ago. This could present a big opportunity for companies like Lookers with a three-year ownership cycle being much shorter than it has been historically. New car resigistration indicate car sales are growing but much of this was lower-margin fleet business. Shares in the group have stepped on the gas and now trade for 17 times earnings.

Mondi shares are downgraded to a hold by the Sunday Telegraph's Questor, after tipping the shares at 1,150p in late January and seeing them rise to more than 1,559p since. Recent half-year results saw profits grow 26% as the packaging group sold more packaging at higher prices across its major European markets.

Mondi is reaping the benefits of investing on modernising its factories across eastern Europe and green energy to also cut reliance on volatile energy prices. The packaging sector is often overlooked by investors but it is enjoying steadily increasing demand from the growth of online shopping and more packaging in supermarkets, which should see the second half results hit their mark.

As well as one of the strongest balance sheets in the sector, Mondi also generates good cash levels. The problem now is that the shares now trade on 17 times forecast earnings per share – a premium to sector peers and the FTSE 100. Mondi is solid but in a cyclical industry that rating is too high.

Shares in Benchmark Holdings are a punt for adventurous investors, said Midas in the Mail on Sunday. Benchmark, in which star investor Neil Woodford's funds hold an 18% stake, has 61 treatments in development for fish and other animals. Several are vccines to counter the rising disease problems in the fish farming industry, in order to reduce the amount of antibiotics given to fish, in line with warnings from food safety experts. Benchmark is a pioneer in vaccines for animals, with another of its most advanced products being HypoCat, designed to treat human allergic reactions to cats by vaccinating cats rather than the people affected by them.

As well as vaccinations, Benchmark also advises companies such as McDonald’s on its free-range eggs and also counts retailers such as Tesco and Marks & Spencer among its clients. A profit warning this year followed a generic competitor to its farmed salmon de-licing produuct, but analysts expect Benchmark to increase sales by 19% to £35.4m in the year to September and by more than 65% next year to £70.4m.

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