The Week In Review: Homeserve in search of the way forward
Saturday 29 September 2007
Where does Homeserve go from here? The emergency repair group put out a trading statement this week confirming that earnings for the first six months of the year are on track.
However, having lost out this month on acquiring Domestic & General, doubts linger in the City about how the company will continue to generate earnings and profits at the rate to which stock analysts have become accustomed.
On the upside, the weaker first half of the calendar year is behind Homeserve. The company should now see a sharp uptick in business; burst pipes and other household calamities naturally increase in the autumn and winter months.
Homeserve is trading at 20 times the forecast 2007 earnings. Some analysts expect this ratio to fall next year, and now looks like a good time to take a break and watch Homeserve's next move unfold from the sidelines. Sell.
Document-management software may sound somewhat prosaic compared to the hi-tech gizmos end of the technology market. However, it is a fast-growing sector, and Invu is one of the better-known providers of systems to aggregate and order documents. It targets small and mid-sized companies, and achieves a gross margin of well over 90 per cent. The more bullish argue that Invu should sit on a premium rating compared to its peers, and that a recent fundraising and reorganisation of its shares should see its stock heading back towards the 40p level and beyond. But investors should be wary of betting the form before there is some solid evidence that the upturn is on the way. Hold.
Investors could be forgiven for running a mile at the mere mention of the name Coffee Republic. The company has, after all, spent 12 years charging two quid for a cappuccino and yet still failed to make money out of it.
But the new chief executive, Steven Bartlett, has been busy signing new franchise deals to bring the company back to life. He might have found a formula to turn this long-time ugly duckling into a swan. Based on that, it is worth tucking a few of these shares away to see if he has. Buy.
Aberdeen Asset Management
It was not so very long ago that Aberdeen Asset Management's very existence was in doubt after it found itself at the centre of the split capital investment trust scandal. But a recovery has been achieved by repairing the company's damaged balance sheet, and by some very sharp acquisitions. Today, it is in positively rude health, yet still trades at a slight discount to the sector. At a prospective 3.2 per cent, it also offers a better yield. Buy.
JKX Oil & Gas
Investors in JKX Oil & Gas have been laughing all the way to the bank. The company's main production assets are in Ukraine, where it has been a major beneficiary of Russia's decision to force its neighbour to pay European market rates for its oil. It will further benefit from Russia's decision to stop subsidising its own consumers by forcing them to pay market rates, too. There remain serious political risks with this stock, but the company at least has good experience of operating in this market. At 10.7 times full-year earnings, it is hardly expensive, and the decision to double the divvy to 2p is to be commended. Buy.
Chrysalis, the brand made famous for its music imprint that had a string of hits in the 1980s, has hit upon fairly hard times. It has slimmed down substantially over the years, most recently selling its radio division for £170m, leaving it to focus on music publishing. This week, it warned that its prospects over the next six months are unexciting due to a particularly light release schedule. But the publishing business is highly regarded, and the company is a clear takeover target. With music publishers in much better shape than recorded music players at the moment, Chrysalis could be worth a punt at the right price. Buy.
United Utilities provided no news about the proposed sale of its electricity business and its capital restructuring when it issued a trading statement this week. The company simply said that business was in line with expectations and that the sale process was proceeding. Given the current vogue for infrastructure assets, there appears to be no shortage of bidders. And who knows; the more focused water and waste business that will be left with UU after the sale could find itself in bidders' firing lines. It is well worth hanging on in there to see what emerges from the current turmoil. Hold.
John David Group
Something of a surprise from John David Group – that's JD Sports to you and me. It is possibly the only retailer in its little subsector not to be whinging at results time about the lack of a major football tournament leading to depressed sales of replica shirts. JD is far more differentiated than its rivals, stocking a range of brands that you will not find anywhere else in the UK and working closely to develop its own exclusives with others. Current trading continues to run ahead of expectations, and though there are worries about the outlook on the high street, the shares look cheap. Buy.
Investors in Topps Tiles have had a torrid time of it recently owing to rumours of an imminent profit warning. But this week's trading statement revealed a far more resilient business than the rumours have been suggesting. With new store openings set to continue and a successful foray into the Netherlands potentially the springboard for further overseas growth, the outlook appears healthy. And, trading on less than 11 times next year's earnings, the shares look to be seriously undervalued. Buy.
Compass supplies outsourced catering to a range of global private and public-sector customers. They seem to have put behind them negative issues such as corruption allegations regarding a UN contract. The world's largest contract caterer now expects full-year results to come in at the top end of forecasts. However, even taking into account the turnaround and hard work from management, the shares look expensive. In the longer term, investors are unlikely to have too many complaints, but in the shorter term the shares look fully priced and are not propped up by a strong enough dividend to tempt income seekers. Hold.
The omens have not been good at property and facilities services group Erinaceous for some time. Takeover talks with four potential bidders kicked off in April but the share price began falling hard a long time before the talks were officially called off in August. To compound the bad news, Erinaceous confirmed it has breached some banking covenants. It now looks like the only way out is to sell off the family silver to reduce borrowings. Erinaceous has been managed appallingly. Investors still in the stock should cut their losses and sell.
Moss Bros, the formal-wear hire and retail group which operates 154 stores in the UK, reported a small pre-tax loss of £0.8m for the first half this week. But management believes the company is now well positioned to outperform its rivals on the high street. However, while everyone else is struggling, outperformance does not guarantee profits. Although the company has a strong balance sheet with decent cash generation it takes a brave investors to punt on a high street name at the moment. Hold.
Donald MacInnes: 'I have to have £500 a month spare from now until at least 2035'
HSBC becomes first bank to offer five-year fixed rate mortgage with interest rate under 2%
Are finance apps stealing your personal data?
Pension freedoms: How to deal with cold calls from scammers
Barclays new Blue Rewards hands cash to customers. What’s the catch?
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 2 Katie Hopkins and The Sun editor David Dinsmore reported to police for incitement to racial hatred following migrant boat column
- 3 Parma, Missouri: 80 per cent of town's police quit after first black mayor is elected
- 4 Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
- 5 Google search history can now be downloaded in its entirety, mass embarrassment expected
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
Katie Hopkins on LBC: Listen to caller taking The Sun columnist to task over migrant comments
iJobs Money & Business
£12000 - £15000 per annum: Recruitment Genius: An expanding Insurance Brokerag...
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
Day In a Page
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
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