Tuesday tips round-up: Petra Diamonds, Aveva

Mining is a laborious process. It takes time to get at the precious stones and ores buried deep underneath our feet. Nevertheless, eventually it can be quite a lucrative undertaking. The same is true of stock in precious gems miner Petra Diamonds.

The company is investing in new areas for mining and when it is done the new mines can keep producing for decades. The outfit is confident that it can ramp up its production to five million carats by the end of the financial year 2019. Furthermore, once production has increased Petra Diamonds will be able to return substantial amounts of cash to its shareholders.

At one of its older mines, Cullinan, production did fall by 15% in the first half of the year, for technical reasons. The price of rough diamonds was also depressed, as is typical because pre-Christmas sales had already been booked.

So while the stock does not look like an immediate “buy” – they were the best performers within the FTSE 250 last year – The Times’s Tempus believes that: “they look well worth tucking away for the longer term. Buy long-term.”

Unsurprisingly, software designer Aveva’s third quarter trading statement revealed that large engineering projects in the oil and gas markets were coming under review following the collapse in oil. Even so, recurring revenues were as expected and the firm achieved several rental renewals.

Waters were calmer outside of the energy patch, with steady growth in power and marine still subdued. Yet the most important time of the year will be the fourth quarter, when several key renewals are due. At the moment, the company expects to win these, as it has done historically.

There is no guarantee that it will repeat the same trick this time around. However, Tempus says: “the long-term story is intact and I would still be buying.”

Tempus added: “I would not blame nervous investors who had taken my advice to buy to consider a little profit-taking, though.”