The Week In Review: New readers, don't start here

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The Independent Online

Bloomsbury?

Forget about Harry and Hermione. The curious Jonathan Strange & Mr Norrell have been the heroic magicians for Bloomsbury Publishing this year. The central characters in Susanna Clarke's bestselling debut novel, have helped profits at the group rise 12 per cent for the first six months of the year.

Some 12 per cent of Bloomsbury's sales now come from the US and Germany. Further balancing of its portfolio comes from a bank of solid, repeat-edition reference titles such as Who's Who and Black's Medical Dictionary.

The Harry Potter effect is still an important factor in deciding whether to invest in Bloomsbury shares, of course. The sixth instalment beat all records, so group profits will leap by 21 per cent this year.

The next chapter will be Harry's last but he will provide bankable earnings for the group in perpetuity. Even so, shares in the company appear to be fully valued. New readers shouldn't start here. Only a hold.

Whatman

Bob Thian's chairmanship of Whatman has been marked by the loss of three chief executives, but he has presided over a dramatic improvement in the efficiency of a business that had lost its way. Engineer Whatman has had further sales disappointments since we switched our stance from "buy" to "hold" a year back, but they have so far been outweighed by cost savings from an acquisition. The shares, though, have not become cheaper. Hold.

Foreign & Colonial

Large mergers of fund management houses rarely turn out well - the unrest often prompts a period of poor performance and an exodus of clients . This has been the experience at F&C since its reverse takeover by Isis last year. The latest interim results show another outflow of institutional funds. Existing investors should sit tight. For everyone else, there are better buys among fund managers.

Antofagasta

Antofagasta, which mines copper in Chile, warns wages and fuel costs are rising. Happily, the price of molybdenum, a by-product of copper mining, is up 293 per cent in a year. The copper price, too, has been sent soaring by demand from China, India and the West. The recent death of Antofagasta' s chairman, Andronico Luksic, head of the family that owns 65 per cent, might make it vulnerable to a bid. Keep buying.

Cornwell

Little Cornwell Management Consulting has been disappointing since we added it to our portfolio of tips for 2005 in March. But the latest results yesterday showed a 12 per cent jump in turnover to £10m in the first half of the year, with profit up by more than a third to £970,000. It is still worth buying.

Tullow Energy

We tipped Tullow at 106.5p in 2002 and again at 136.5p last year. But while this week's results were stonking, we believe the market is optimistic about the results of high-risk drilling projects later this year. Also, the high oil price has obscured rising costs across the natural resources sector. And Tullow's North Sea acquisitions are a big bet on UK gas prices, which may not stay as high as the company expects. Sell.

SIG

Things are going well for SIG, a supplier of specialist building materials. The last set of tighter building regulations in 2002 spurred a jump in sales of its insulation products and there will be another round by 2007. The UK economy has been strong and SIG has been winning share on the Continent. Despite all this, the shares are fairly valued on 14 times earnings. Buy.

Islamic Bank Of Britain

The Islamic Bank of Britain was floated last year in order to introduce to Britain the concept of sharia-compliant banking. With powerful backers from the Middle East and a marketing campaign that is trying to get imams onside, IBB will turn into a profitable - and important - bank, but its valuation at this stage is too rich. Avoid.

Luminar

Luminar, the nightclub owner, has delighted shareholders with news that trading over the six months to the end of August had been flat. Not much to toast, you might think, but shares in the company have been in free-fall since the start of the year. However, while Luminar's healthy cash generation is one bright spot, not enough progress has been made and the risks are still high. Steer clear.

Aggreko

There is no room for the sentimental in the City's dealing rooms. Within hours of it becoming clear that Hurricane Katrina had caused unprecedented devastation, shares in Aggreko had leapt to their highest level in three years. The group is one of the world's biggest suppliers of portable generators and air conditioning units, and its equipment is often in demand in this storm-ravaged region. Elsewhere, Aggreko is already firing on most cylinders. Buy.

Prostrakan

ProStrakan doesn't want to be described as Shire II but with Harry Stratford, founder of Shire Pharmaceuticals, as chairman, and Wilson Totten, Shire's former research head, as chief executive, the comparison is inevitable. Shire made it to the FTSE 100 through a string of acquisitions - and ProStrakan intends to do the same. Worth tucking away for the long term.

The above are recommendations from the daily Investment Column

Dixon's volatile Regus is a touch too risky right now

Mark Dixon says that by founding Regus in Brussels in 1989, he "created the on-demand workplace concept and brought it to the world".

It is no modest achievement. Regus now runs 750 centres in 300 cities across 60 countries. Dixon was right to identify that so many businesses need temporary accommodation, though the company came close to collapse after the dotcom mania ended.

Regus has learned from this difficult beginning and rewarded our tip of the shares as a speculative buy at 75p last year. The latest interim results showed strong cash-generative growth - but they actually damaged the company's chance of a full rehabilitation by the City.

Firstly, there was a worse-than-expected loss at the UK arm, which is now 58 per cent-owned by a venture capital partner. Secondly, Dixon is opening new centres at a great rate, particularly in China and India. The costs of kitting them out will weigh heavily this year.

The market needs to weigh short-term downgrades against longer-term upgrades, but with Regus's chequered history, the former are very important.

With this volatile share dominated by speculative traders and not notably cheap on 15 times next year's earnings, you are safer out of it.

s.foley@independent.co.uk

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