The bits of the business that are still struggling are either being sold off or under review - 235 stand-alone Beefeater and Brewers Fayre pub-restaurants have been put on the block, while the future of TGI Friday's and Pizza Hut is being reviewed.
Alan Parker, the chief executive, denied rumours that the multi-branded business would be carved up, but he is doing just that. The 46 Marriott hotels are gone, as has the Chiswell Street brewery, whose sale last year severed the last tie with Whitbread's 255-year-old beer heritage.
Parker's stated focus is on the leading PTI and Costa brands, which have embarked on an aggressive expansion drive. The group posted like-for-like sales growth of 1.6 per cent in the 13 weeks to 1 June.
The recent high disposal price achieved by Punch Taverns for 290 Spirit pubs bodes well for Whitbread's pub-restaurants, and has fuelled hopes of a £400m-£500m deal. Parts of the proceeds could be returned to shareholders, on top of this week's £400m return.
However, all this has already been priced into Whitbread shares. Hold.
The telecoms provider Thus turned in a better cash performance than analysts had expected in the year to March, as it rapidly improved the cash profile of Your Communications, acquired during the year. Thus also performed well at the revenue and earnings lines, and the shares have yet to factor in the sale of its Dutch internet business to KPN at a higher-than-expected price. Buy.
LEISURE & GAMING
Since Leisure & Gaming was created two years ago to tap into the online gaming craze, it has unveiled a spate of acquisitions. This week, the fast-growing company snapped up Bet-shop, in a £32m deal to branch out into Europe. L&G's maiden results showed pro-forma pre-tax profits of $13.2m. Buy.
There are 158 mining companies to choose from on the Alternative Investment Market, and Celtic Resources is something of a veteran, having been listed since April 1996. This week's results were poor, showing a decline from pre-tax profits of $5.7m in 2004 to a loss of $263,000 last year. It blamed a 39.6 per cent rise in operating costs, and a $1.3m foreign- exchange loss. Avoid.
Halma makes fire and smoke detectors, lift sensors, devices that detect leaks in pipes and gas installations, and theatre lighting. But while the group is likely to continue to deliver profit growth for some time, some of its peers are cheaper. Avoid.
GW Pharmaceuticals hopes that it has found a blockbuster drug in Sativex, an oral spray for multiple-sclerosis sufferers that is derived from cannabis. But while the potential market is large, wait for the drug to get approval in the European Union before buying the stock. Avoid
Hunting has been in the energy-services business for more than 100 years, and now makes components used in drilling for the black stuff and transporting it and storing it ahead of use by refineries. The shares trade at 15 times forecast earnings for 2006. Its rivals in the sector, on average, trade at 23 times. This discount is unjustified. Buy.
There was more embarrassment for Sir Richard Branson this week after Victory Corporation, the cosmetics business that the tycoon controls via Virgin group, unveiled another set of dire results. The group reported a loss of £2.3m, compared with a profit of £1.2m last year. Avoid.
Crest Nicholson kicked off the reporting season in the housebuilding sector this week with a solid set of interim figures. But the near- term performance of Crest shares depends on whether the takeover rumours surrounding the company come to anything. Property tycoon Gerald Ronson controls 23 per cent of Crest and last year pitched a bid between 345p and 430p. His offer came to nothing but there is a good chance that Ronson will return or that Crest will be bought by a bigger rival. Hold.
This week's strong full-year results and the £17m acquisition of Symphony Telecom will perhaps get telecoms company Redstone noticed. The management team has turned a heavily loss-making also-ran in the fixed-line telecoms sector into a company that expects to play a significant role in the further consolidation of the industry. Investors can expect upside from the Symphony deal. Buy.
Monstermob is well positioned to take advantage of the spiralling growth in mobile content across the globe. It can re-use its products by rolling out content into emerging markets and with more content available, prices should decline quite rapidly. Monstermob needs to prove it can generate recurring revenue from content other than one-off purchases of ringtones and wallpaper, but the stock is oversold. Buy.
The above recommendations are taken from the daily Investment Column
HBOS shows the value of having financial strength
Even Howard, the cheesy bank manager from HBOS's television adverts, would struggle to find anything new to sing about in this week's update from his employer on trading in the first half of this year. HBOS reassured investors that business is ticking along nicely and declared itself "comfortable" with forecasts for profits before tax for the year of £5.2bn, up from £4.8bn in 2005.
The H in HBOS is Halifax, the UK's biggest mortgage lender (the BOS is Bank of Scotland). Its share of net home loans is 17 per cent, not much better or worse than in the first six months of 2005. Bad debts are as expected too, with City experts pencilling in a full-year impairment charge of £1.9bn, £300m more than in 2005. An absence of any positive surprises left HBOS shares lower. Trading at 9.1 times projected 2007 earnings, they are neither the cheapest nor the most expensive in the UK banking sector.
Still, HBOS's return on assets may still be lower than the other big banks, but it is climbing while they are falling. For some time, HBOS has been seen as the chippy little brother to the Big Four high-street banks, punching above its weight and mounting a muscular challenge in current accounts and lending to businesses. Shareholders looking for a company with financial strength and a management with a proven track record of making the right calls need look no further. Buy.Reuse content