The Week In Review: One transport company that is really going places

Ding! Ding! All aboard the new concept in public transport: a bus that looks like a tram.

Ding! Ding! All aboard the new concept in public transport: a bus that looks like a tram. The vehicle was unveiled this week by FirstGroup, the bus and trains operator, which will trial it in the bus lanes of Yorkshire early next year.

The aim is to lure out of their cars those people who are too snobby to get on a bus, but who would go weak-kneed at the sheer novelty of travelling by tram.

It is good to see a bus and rail operator being innovative in this way, in cahoots with local authorities that are keener than ever to encourage the use of public transport. On the railways, First has lost some franchises, but won the mighty ScotRail contract to run all the trains in and into Scotland. Running the trains and buses is never going to be high-margin business, with cost pressures everywhere you look, from cash-strapped government bodies overseeing the railways, to fuel and wage costs in the bus industry, where there is still a big shortage of drivers. However, First is viewed as one of the more efficient operators.

Cautious growth abroad ought to supplement steady progress in the UK and, with a 4.2 per cent dividend yield in prospect, it is worth hopping aboard.

VIRGIN MOBILE

Virgin Mobile floated in the summer and potential investors would be wise to take note of the volatility the shares have shown so far. The sharp ups and downs are probably a sign of things to come. The UK is one of the world's most competitive mobile phone markets and Virgin faces some hugely powerful rivals, but it is not encumbered with a costly network, piggybacking on the network of T-Mobile. With short-term growth prospects and a 4 per cent dividend yield, the shares are a buy - but be ready to take profits when they arise.

WHATMAN

Whatman's expertise is in hi-tech filters, used in a range of industries, from environmental testing, through food and drink manufacturing, to drug research. The company lost its way after a string of acquisitions, but has since been pulled back together by a new chairman. The share price now reflects optimism for more efficiency improvements and hopes for a new DNA purification system, already used by police forces and that could soon find other uses. Hold.

BLOOMSBURY PUBLISHING

With no new Harry Potter title published this year, Bloomsbury Publishing has had to conjure up other sources of growth. It has set up operations in the US and Germany, and continued its impressive record of spotting new publishing successes. The company also has a roster of established authors, such as Joanna Trollope and Michael Ondaatje, and more than a quarter of its business is in reference books - solid, repeat titles such as Who's Who. Worthy of shelf space.

GYRUS

Gyrus, which makes machines and instruments for keyhole surgery, is being run as a serious commercial outfit, after outgrowing its origins as a research-driven technology group. But its push away from specialist niches into general surgery has shown only mixed success so far and the launch of a hi-tech hearing aid has been a disaster. There is just a tiny bit too much to worry about for a company whose shares are highly valued. Potential investors should hang fire for a while.

TOREX RETAIL

Torex Retail's software links store tills with head office to give retailers vital information on customers' shopping habits. The company is keeping up old clients, winning new ones and generating plenty of cash to fund acquisitions that will boost its market share further and create opportunities in Europe. There is only a miserly dividend at this stage, but the long-term rewards will be handsome. Buy.

SPRING GROUP

The spring collections on show at London Fashion Week had nothing this year as showy as Spring Group's collection of financial figures, which were as glamorous as it gets in the world of IT staffing. Revenues surged and, at the profit line, black is the new red. Demand for IT contractors has grown as companies dust off projects that were mothballed after the dot.com bust. Spring shares ought to stay in fashion as long as the UK economy stays upright on the catwalk. Buy.

NXT

NXT has invented an extraordinary kind of loudspeaker, one so flat it can be fitted in spaces that traditional speakers cannot. But unless NXT is designed in to a mass market product there will be no justification for the current share price - and NXT's £8.6m cash reserves will run out. The shares are likely to fall, so even true believers should wait before buying.

IMPERIAL TOBACCO

In the UK and Western Europe, smoking is in decline, thanks to public health campaigns and tax increases. In these mature markets, Imperial has to compete ferociously on price and, with the growing prospect of a smoking ban in the UK, sales are under further threat. Eastern Europe, Russia and Asia present the biggest opportunities, as state tobacco monopolies are broken up, but less than 20 per cent of Imperial's business is so far outside western Europe. Avoid.

TATE & LYLE

Everything appears to be going Splenda-idly at Tate & Lyle. The food ingredients company, which makes cereals, sugars and starch, has invented a new sweetener called sucralose, which it has branded Splenda. The product is made from sugar, so it tastes like sugar but - get this - it has got no calories. Soaring demand for the product is reflected in the Tate share price, which looks pretty high historically, but the dividend yields over 5 per cent, making the stock a buy for income.

ADMIRAL

Admiral, the motor insurer, set sail on the stock market this week, and it has a compelling investment story to tell. In Elephant, Admiral and Diamond (for women drivers), it has three of the UK's strongest car insurance brands to build upon. The biggest risk is insurance premium rates softening. But with a strong management, which has grown the business almost tenfold over the past five years, the longer-term outlook is encouraging. Worth coming aboard.

Dairy Crest has sweetener in store for loss of contract

Some of the bad smells emanating from Dairy Crest of late are not solely due to the maturing vats of its Cathedral City cheddar cheese. In August it warned that losing a Tesco milk supply contract to Robert Wiseman Dairies would hit profits in 2005. Its share price curdled on the news - but a lower share price means a higher dividend yield for new investors.

The latest news is better. St Ivel Gold and Country Life Spreadable are performing particularly strongly. For a consumer goods company it was reassuring to hear the chief executive Drummond Hall talk of increased investment in advertising for his key brands, which account for 40 per cent of operating profits.

Division by division, then: in cheese, sales of mature and mild cheddar have held up on the back of low industry stock levels, and Cathedral City is still the UK's leading branded cheddar.

Frubes and other such branded yoghurt products, owned by a joint venture with Yoplait, enjoyed good growth but own-brand versions are struggling and the company is shutting a factory at Enfield.

The doorstep delivery business is in decline, but the company has been selling more fresh produce from its milk floats and acquiring small delivery businesses to keep the annual rate of top line shrinkage to about 9 per cent. And the troublesome milk division is looking to replace the lost Tesco contract, as well as reducing overheads to readjust.

Dairy Crest's 6 per cent dividend yield, which is not at risk, makes its shares stand out as good value. Buy for income.

The above is a selection from the daily Investment Column