Sunday share tips: William Hill, gem miners, Centamin

Despite the problems at William Hill, its shares are worth buying, said the Sunday Times’ Inside the City column. The bookmaker’s stock has tumbled more than a fifth since May, with a profit warning last month bringing further worries to a head. The company has been left on the sidelines, despite attempts, as rivals have been splashing the cash in the M&A market as the industry changes in the face of new taxes and a shift to online.

But some analysts have called a bottom of the market for Wills, with the company’s new online sports betting platform and mobile app winning praise and easier comparative figures to play from December onwards. A strongly cash generative shop estate means short odds on another deal attempt next year, while the share price slump could see it become a target.

After precipitous share price falls, gem miners such as Petra Diamonds and Gem Diamonds are worth another look, suggested Questor in the Sunday Telegraph. While prices in diamonds, emeralds and rubies have all been pushed off a cliff by worries about China, dragging share prices down with it. With giant peer De Beers cutting prices, London’s listed diamond miners have been unsparkling investments this year, with Petra down by almost two-thirds after a warning about its debt covenants in October. But most of its debts are not of concern at present and the company should pull through, with its shares attractive at five-year lows. Likewise, rival Gem paid a dividend in June, so cannot be in too dire straits.

AIM-listed Gemfields disappointed with production at its Mozambique ruby mine in in the first quarter but its emerald mine in Zambia impressed with volume and quality of stones. The ruby mine is a new one and costs have mounted as part of a long-term strategy to pursue quality over quantity to feed subsidiary Faberge, the luxury jeweller. Gemfields is a dominant player and, Questor said, looks one to hold for the long term.

Shares in gold miner Centamin are not for nervous investors, wrote Midas in the Mail on Sunday, but are a buy for those willing to take a punt. Like its gem mining cousins, Centamin has been wallowing well off its 2011 high as gold pulled back from its peaks in the last few years.

Debt-free and dividend-paying since last year, Centamin’s main asset is its low-cost Sukari mine in Egypt, which produces more than 400,000 ounces a year and is hoped to expand to 0.5m oz within 18 months. As production expands, average costs will fall from $950 to around $800, with the gold price having just fallen below $1,100/oz, close to its five-year low. The group hopes to acquire more assets in under-explored Egypt, to add to those added last year in West Africa that should see exploration updates next year.

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