Star gazing: our six stock market show-stoppers
SHARE TIPS 2005: 'IoS' business writers make their recommendations for the companies to watch this year
Ignore the programmes, look at the prospects. The City has not been a fan of ITV since it was created by the merger of Carlton Comm- unications and Granada. The shares have fallen nearly a third to end on Friday at 105.25p, leaving one of the world's pre-eminent broadcasters with a market value of just over £4bn.
But while the uninspiring programmes on ITV1, and the poor audience figures, might cause worries about short-term figures, the long- term prospects look excellent. The cost cutting since the merger will help margins, and getting rid of non-core assets will make the balance sheet look healthy. However, the biggest positive comes from regulation - with ITV likely to secure further cuts in the amount it pays the government for its licences, and hints from the regulator, Ofcom, that there could be an easing in the regime that restricts how much ITV can charge advertisers. It's a case of "never mind the quality, feel the value" with ITV.
There are plenty of reasons for stock pickers to avoid tele- communications. Wholesale telecoms prices are sliding; voice over broadband is taking off, putting pressure on retail prices; and there are huge uncertainties due to Ofcom's regulatory review.
But it is for these reasons that Vanco is worth a look. Valued at £145m, it offers telecoms services to companies such as Ford, Siemens and Lloyds TSB. And, unlike most telecoms firms, Vanco doesn't own any cables or telecoms masts. Instead, it leases capacity from other companies and sells it on to customers with extra services on top. So, while the likes of Cable & Wireless will continue to suffer from the slide in wholesale prices, Vanco will enjoy fatter margins.
Analysts also reckon that it is well placed to take advantage of voice over broadband. And the Ofcom review will open up the market to more competition, offering richer pickings for Vanco. At 268p it could be worth a punt.
Since buying Safeway 18 months ago, the supermarket group has been propelled into the big league. But the integration process has not gone smoothly, with costs higher than forecast and shoppers deserting non-converted Safeway stores. The chain issued its first profit warning in 37 years as a public company and the shares suffered, finishing 2004 at 207p.
Yet 2005 could be the year it turns the corner. Prior to the deal, Morrisons regularly reported solid growth and strong results, and no one disputes its long-term ability to integrate Safeway and take its place among the supermarket giants. And, despite his sometime offhand attitude towards the City, 73-year-old boss Sir Ken Morrison is highly rated.
The question is when the turnaround will get under way; it could take longer than 12 months, so this tip has its risks. But the first signs of improvement should see investors charge, and buying now could be an opportunity to get in ahead of the crowd - at a bargain price that Sir Ken himself would approve of.
We've had our eye on this company for some time. Twice a finalist in the Indy 100 - The Independent on Sunday's competition for fast-growing firms - its strategy of offering cut-price domestic gas, electricity and phone calls has impressed.
The problem is that we weren't alone in spotting its potential and it has built a decent following in the City and maintained a healthy rating.
But a hiccup last month took the wind out of its sails. The company, with a market capitalisation of £136m, warned that it would suffer a £4m loss as a result of rising gas prices. The shares fell sharply and have yet to recover from the current 222.5p.
But there shouldn't be any more shocks for its share price and, with rivals raising their tariffs, Telecom Plus's promise of low-cost utilities should win plenty more customers in 2005.
Education, education, education, they say. Dame Marjorie Scardino, chief executive of Pearson, would certainly agree.
Last year the company made almost two-thirds of its profits from selling textbooks to US schools, and by providing educational tests.
But because it also owns the Financial Times and Penguin, it is lumped into the "media and entertainment" index of the FTSE. Pearson underperformed both this index and the FTSE All-Share in 2004.
But there are reasons to be optimistic about 2005, and its shares look good value at 628.5p. This year, US states have more money to spend on textbooks after a couple of bleak years, and things should also pick up at Penguin as it is close to fixing its distribution problems at its new warehouse in Rugby. In a Novem- ber trading statement, Pearson also said the loss-making FT could break even in the fourth quarter. Whether it can build on this in 2005 isn't clear as the advertising outlook is uncertain. But Pearson is less dependent on ad revenues than most of its media counterparts, so don't be put off.
Hill & Smith
After the poor performance of his tips last year and the year before, Jonas Nissé, son of the business editor, has been replaced as our "naive investor" by his younger brother, Albert. Albie, as he prefers to be called, would like to point out that he cannot be held responsible for his brother's recommendations as he is only six months old and wasn't born at the time.
Albie's method was to grab the FT prices page and try to ram it into his mouth. The page was then rescued by his father, who determined where Albie's mouth had been for the recommendation.
This was the engineering sector and, in particular, Hill & Smith. The company makes products for the building industry and infrastructure projects, with one of its most successful lines being temporary crash barriers that protect rail workers.
It is not well followed in the City but this does not mean it is not popular. Its shares have more than doubled in the past two years to 120p at Friday's market close.
This is Albie's chance to outdo his big brother.
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Day In a Page
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000