Pearson's trading update this week was the envy of much of the media sector. Underlying sales at the publishing group were up 5 per cent and profit up 15 per cent for the first nine months of the year. This in an industry where most companies are struggling to show any growth.
The difference is that Pearson is not much exposed to advertising revenues, except through theFinancial Times (which provided sales of just £179m out of £1.9bn at the half-year stage). The company's fortunes are tied to selling textbooks to the US, where it covers a third of the market for schools and higher education. The other arm of Pearson is its Penguin books division. This went through a difficult period in 2004-05, due to distribution glitches and other issues, but it is now doing OK - full-year sales growth will be 1 per cent this year.
Pearson has a fantastic collection of assets, which are performing well. While Marjorie Scardino is chief executive there is little prospect of a break-up but, while she has announced no retirement date, she turns 60 next year. Hold.
Worries about terrorism and extra security measures at UK airports continue to take their toll on MyTravel. Long-term, however, the growing numbers of people who favour piecing together their own flights and accommodation online are a much bigger threat to the group's business. Avoid
Tinopolis was little know outside its Welsh base until its audacious - and successful - bid for rival independent TV producer Television Corporation last year. This week, the AIM-listed group boasted of strong market conditions and said it was optimistic about the future. It has also made a high-profile hire. John Willis, a former head of programmes at Channel 4 and MD of London Weekend Television, is to become creative director. Buy.
The Innovation Group has kept its head down over the past few years in order to transform its business model after suffering post-tech boom malaise. TIG entered the US earlier this year through the acquisition of SurePlan, which extended the insurance claims outsourcing model that it has employed in South Africa and Australia in recent years. On top of its software, TIG provides outsourcing services to insurance customers. Buy.
ST JAMES'S PLACE
St James's Place, the upmarket wealth manager, is grabbing more than its fair slice of the savings market. Strong third-quarter figures reflect St James's healthy position in the upper reaches of the pensions market, which have boomed since the so-called A-day tax reforms introduced in April. Buy.
Financial Objects is on the road to recovery. The small software provider turned in impressive interim results last month and appointed a new chief executive this week. Karim Peermohamed joined the company in 1997 and rises from the position of chief operating officer. Hold.
Mr Kipling's cakes will help RHM's interim results meet analyst forecasts. That was the key message from the food maker's trading update to the City this week. However, analysts are sceptical about the sustainability of the cakes recovery, and while the company's bread division has recently gained market share, this trend may be reversed. With high energy and wheat costs set to plague RHM for some time, avoid.
Armour Group, the home and in-car electronics firm, has shed a third of its value since the start of the year after a series of profit warnings. Full-year results this week showed a decline in pre-tax profits to £1.6m from £2.1m. However, measures have already been taken to cut the company's cost base and at just nine times forward earnings, the shares are a buy.
Synergy Healthcare's growth over the past five years has been spectacular. When it listed in August 2001, it had a market value of £13m. This week, the group was valued at more than £250m. Synergy makes its money from cleaning bed linen, uniforms and surgical equipment for the NHS and hospitals in the Netherlands. Given the increasing emphasis on hospital hygiene, prospects are good. Hold.
Entertainment Rights has built up a substantial back catalogue and portfolio of characters including old favourites such as Postman Pat, Basil Brush and Rupert the Bear. Children's memories are short and the appetite for repeat viewing tends to be high, allowing the content to be aired on television again and again with no real detriment to viewing. Worth a punt.
Investors were nervous about holding BG Group stock ahead of this week's third-quarter results. Shares in the oil and gas producer trade at a hefty premium to the wider sector and had the group missed City forecasts they would have taken a pasting. As it turned out, BG's figures met expectations. Given the company's reserves and the management's track record of delivering growth, the shares are well worth holding.
Shares in food group Cranswick have roared to an all-time high following its purchase of Delico, a producer of pre-packed cooked meats, for £17.9m. The deal gives Cranswick spare capacity, enabling it to take advantage of the 8 per cent growth in the pre-packed market. The shares now trade at a slight premium to its peer group but for a company with an unbroken profit growth record going back to the early 1990s, this is fully justified. Hold.
The above recommendations are taken from the daily Investment ColumnReuse content