The Week In Review: For Wimpey, best opt to buy

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The Independent Online

Buyers of new George Wimpey homes are able to purchase extras such as posh kitchen appliances, extra light fittings, landscaping for the garden, maybe even a greenhouse if they fancy. Most builders offer something similar, but Wimpey is taking it furthest with the promise to establish six "Options" showrooms by 2005.

Wimpey is not the best builder whose shares you can buy. Its margins are below average, despite Options, because it has a short land bank (which means it has not had the valuation uplift you get from sitting on land for a few years in a bull market). It is also more exposed than most, through its Laing Homes acquisition, to the south-east, where a sales slowdown is likely.

But the housing market looks strong as demand continues to exceed supply, and interest rates and unemployment are low. Wimpey has a 3 per cent dividend yield and every chance of continued capital appreciation. Buy.

Carphone Warehouse

Carphone Warehouse's aggressive marketing of its fixed- line telecoms service talktalk, which it hopes will became the main opposition to BT, will run up a £7-8m loss in this financial year. But it doubled the target number of customers to 400,000 by March, so profits will be improved. The shares are worth holding, and any weakness is a buying opportunity.

Datamonitor

For market researchers offering "premium business information" to subscribers, Datamonitor has had a worrying tendency to get its sales estimates wrong. They were wrong again this year, but this time sales will be significantly better than market expectations. The new-found optimism for a recovery in technology spending is encouraging companies to splash out on research in this area again. Buy.

TBI

TBI seems to have learnt how to turn adversity into progress. Extra low-cost flights from its Luton airport offset the withdrawal of charter flights by the package holiday group MyTravel. Similarly, Cardiff has lost full-service flights but has persuaded British Midland's low-cost carrier bmibaby to set up there. The French group Vinci still holds a 15 per cent stake that could provide the springboard for a bid, so TBI is worth buying for the long haul.

Character Group

Character Group, which buys merchandising rights to games and television series for children, has struck three deals with US companies, including Universal Studios, which will allow Character to distribute in this country toys inspired by a new Cat in the Hat film starring Mike Myers. Children are remarkably fickle and the popularity of individual characters can be short- lived. Notwithstanding the latest deals, this could be a good time to take profits.

Newcastle United

Newcastle United's return to profit may be only temporary, because an early exit from the European Champions League will cost the club an estimated £10m and the troubled team, now near the bottom of the Premiership, looks unlikely to get back in the competition next season. Also, problems with debt mean the club will struggle to make significant player signings. A lot of people have a soft spot for Newcastle United but the stock market dances to a different toon. Sell.

API

API, the packaging company which The Independent made one of its share tips of the year, has suffered a setback on its road to recovery. The group operates in the viciously competitive market supplying packaging and labels for drinks, cigarettes and food companies. But management still aims for the group to make a £12m-plus profit within three years. This is achievable since a restructuring will integrate separate businesses which have effectively the same customer bases. Buy.

J Sainsbury

Asda was in crisis at the start of the Nineties but was turned around under Archie Norman. More recently, many said Marks & Spencer was doomed to decline into a minor lingerie chain. Sainsbury is playing catch-up in non-food and warehouse efficiency and still faces both ways in the "value vs quality" positioning dilemma. But you don't have to be a cheerleader for the strategy to bet on Sainsbury shares, and there will be a new chief executive next year. With an enticing 6 per cent dividend yield, now seems a good moment for contrarians to take their punt.

HIT Entertainment

HIT Entertainment is the children's character company on track to be a mini-Disney. Its international megastars include Bob the Builder, Barney the Dinosaur and Pingu. The Bob the Builder phenomenon has slowed but since no single character provides more than 30 per cent of turnover, it is a better balanced company. Hold.

Cookson

Cookson's main division (and the cause of its dramatic fall from grace after an acquisition spree in the technology bubble) makes electronics components, parts used for printed circuit boards. This division is running at break-even, after savage cost cuts, and any upturn in manufacturing orders should swell Cookson's profits immediately. The shares, doubled since March, have further to run.

Austin Reed

Upmarket retailer Austin Reed pins its hopes for an upturn on a brand rejuvenation, with new lines including an eponymous luxury "smart casual" range. The company has been the centre of much takeover speculation and a net asset value per share of 183p, compared to yesterday's 146p closing price, means a bid is possible.Hold.

Speedy Hire

Members of the UK's army of small tradesmen get tooled up at Speedy Hire. Because they are increasingly hiring, rather than buying, tools, the company is growing fast. It lends saws, drills, cement mixers, ladders, pumps, whatever, from a network of 250 depots. The shares have had a cracking run since we tipped them in April, but the prospect of upgrades makes them a buy still.

The above is a selection of recommendations from this week's daily investment columns

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