The Week In Review: A turbulent week at Amvescap, but the future looks brighter

It isn't easy to put a positive spin on this week's debacle at Amvescap, the transatlantic fund manager. The secret internal forecasts that it accidentally sent out, and later had to formally publish, are well below the profit and earnings figures expected by the market.

It isn't easy to put a positive spin on this week's debacle at Amvescap, the transatlantic fund manager. The secret internal forecasts that it accidentally sent out, and later had to formally publish, are well below the profit and earnings figures expected by the market.

All of which is another blow to our optimism of last October, when we tipped this stock. Its run-in with the New York authorities over the market timing scandal (a hedge fund trading strategy which disadvantaged the little investor) has taken longer than expected to settle, which has pushed the shares lower. A fairly grim outcome is already being priced into the shares, though. If the issue is settled by the end of June as planned, the shares could recover some poise.

The bigger picture remains that people in the US and in the UK, where Amvescap owns the Invesco brand, simply have to save more for their retirement. The bear market mauled confidence in the savings industry, but it will - slowly - return. Amvescap also has scope to cut costs across what is still quite a bloated organisation.

The shares have been trading at a valuation a little below the sector average and that seems justified after recent events, but there is a long-term buying opportunity here.

HMV

HMV, the music and books retailer, appears to be suffering none of the problems facing high street generalists such as WH Smith. Strategic challenges remain, of course. Books and music are some of the goods most suited to internet retailing, providing a massive challenge to high street players. For now though, the big rise in DVD sales is compensating for the drop in music. And physically being in a Waterstone's book shop has shown an enduring appeal among shoppers. Buy.

SPORTINGBET

The world is full of closet gamblers, according to Sportingbet, the online bookmaker whose profits more than quadrupled last year. Although sports betting is its biggest game, it is cashing in on the rise of online casino games, particularly in the US. Have a flutter.

LAIRD

New business opportunities can come from unexpected places, as Laird has shown. The engineering company's whizzy technology division was created as a spin-off from its business which makes seals for windows. Sophisticated electronic systems are increasingly used in a range of goods beyond computers. That opens up new products, such as the braking system in a car, which may require the sort of protection that Laird's products can provide. The stock is still attractive given the growth prospects.

EUROPEAN MOTOR HOLDINGS

European Motor Holdings is a company purring like a well-oiled engine. The group runs 35 car showrooms across the UK, representing most major prestige vehicle manufacturers. New car sales in the UK were at record levels last year, fuelled by low interest rates and competitive prices and although rising rates could knock consumer confidence, it will be premature to take profits. Hold.

NUMIS

As the mega investment banks have abandoned the small and medium sized companies sector in the past four years, Numis has been one of the most successful players to swoop in to take their place. It has been able to pick up some heavy hitters to join the team, people who have been cut loose from larger institutions. One of The Independent's tips for 2004, Numis shares are already up 28 per cent since this column tipped them in November. The company is well placed to take further advantage of improving markets. Buy.

UKBETTING

This company's strategy has been to buy up sports content websites, such as planetrugby.com and football365.com, with the idea that the type of customer that will read news and information on a football/golf/rugby website will follow through with a bet on one of its gaming sites - Goldbet, Totalbet, and ukbetting. After a year of acquisitions, the company looks like it is about to start making some money. Buy.

WYNDEHAM PRESS

Wyndeham specialises in publishing magazines and the message, in a trading update this week, was that trading conditions have picked up. The industry's perennial problem is over-capacity and the reason for Wyndeham's optimism is the success of a cost-cutting drive, combined with new contract wins, which have helped compensate for the pressure on prices. Buy.

DRUG COMPANIES

AstraZeneca is often criticised for having a miserly dividend, which yields less than 2 per cent. In part, this low figure is because the share price is so high. The premium to GSK shares is vast. The reason for this is that GSK is a year or two behind AstraZeneca in replacing the sales lost to copycat drug companies with new products. As well as Crestor, a new cholesterol-lowering pill, AstraZeneca is showing strong growth for a portfolio of new products for asthma, cancer, mental illness and others. GSK, though, has just outlined faster than expected progress with its new treatments for psoriasis, breast cancer and neuropathic pain, which could be launched over the next few years. With the drip-drip of positive news on this pipeline over the rest of the year, GSK shares are well worth buying. AstraZeneca's are too expensive.

WESTBURY

Like all housebuilders, Westbury has been enjoying the robust demand and soaring profitability that comes with a runaway housing market. Unlike most in the sector, though, the company is relatively highly indebted and is struggling to increase the number of homes it is building. Only a hold.

GAME

A profit warning last year zapped the shares of Game, the computer games retailer. The company is now anticipating a reduction in sales in the early part of this year and no compelling reason presents itself to buy the shares. At best, a hold.

Imperial still on course

Investors have proved over the past year that they are still addicted to Imperial Tobacco, the cigarette company behind Lambert & Butler. Shares in the company have risen 20 per cent.

Although Imperial is still gaining market share in Western Europe, this is a declining market as consumers become more health conscious and governments impose ever-heavier tax duties. Further smoking bans in public places may impact Imperial, although it says there is no evidence to show that these result in a drop in sales.

Happily there are real areas of growth for Imperial. It is strong in Eastern Europe, Africa and Asia, where there are plenty of new customers to hook up. These areas account for around 22 per cent of the business, and this figure is set to grow.

The company's vigorous cost-cutting programme is being stepped up. That means it may soon return some of its excess cash to shareholders, supporting the share price. The shares have a dividend yield of less than 4 per cent, and they are not the obvious bargain they were when we said buy in November. This is, however, a solid, well-run business forecast to grow profits by 10 per cent a year for the next few years. While its products may not be good for your health, Imperial's shares shouldn't do you any harm. Hold.

The above are a selection of recommendations from the daily Investment Column

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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