The Week in Review: Resilient Umbro kitted out for success

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The Independent Online

In Britain, Umbro reminds many people of their first football boots, shin pads and replica shirts. But worldwide, the supplier of kit to the England football team is gathering a following as a sports and leisure brand.

The company's latest trading update shows that sales in Europe, a territory suffering from sluggish consumer spending, continue to disappoint. But a strong performance in North and South America, as well as Asia, has offset some of this.

Two-thirds of Umbro's sales come from international licensees, which pay a royalty income on the sales they deliver. This model has helped the company expand across the globe. In the US, where football is a minority sport, Umbro has secured a major deal with the retailer, Footlocker.

But Umbro is still predominately a football brand. So it is good news tha the company has recently signed a five-year deal to sponsor Glasgow Rangers. In addition, 2006 is a big year - the greatest of all football contests, the World Cup in Germany, will have prime time exposure.

Readers who followed our advice and bought the shares soon after listing have already tucked away a 16 per cent profit. The shares are trading at about 11 times earnings. The England team never seems to do it on the pitch, but with regard to Umbro shares, keep possession.

JOHN WOOD GROUP

With the oil price at record highs, oil companies have been desperate to get their black gold out of the ground quickly. This is good news for John Wood, consultant to the energy sector, whose engineers help the oil majors maintain their wells. The group has had hit-and-miss earnings performance but now says it will beat expectations. Hold.

MARSHALLS

The consumer slowdown has hit Marshalls, the paving slabs group. The company has hitherto capitalised on gardeners' passion for elegant stonework. After a healthy start to the year, though, retail sales were disappointing in the April to June period. But half of Marshalls' sales are generated by commercial and public projects, where sales are up. Hold.

VIRGIN MOBILE

When Stelios Haji-Ioannou launched easyMobile in March, the theory was that if anyone was going to get hurt among the stock market-listed mobile phone groups, it would be Virgin Mobile. We urged readers to buy the company's shares when they came to the market in September at 200p. But a successful price war fought by easyMobile and Fresh threatened that recommendation. Happily, both companies have now put up their tariffs. The Virgin Mobile share price, at 262.75p, looks more secure as a result.

KIER GROUP

A mountain of public money for large social projects has fuelled Kier Group, which specialises in private finance initiatives for schools and hospitals. Kier is not immune from the housing market slowdown, but the strength of its commercial and facility management operations should offset the weakness. Buy.

BRITANNIC GROUP

Shares in Britannic Group have made a stock market comeback after being suspended on 9 June when the the insurer announced a merger with Resolution Life. The price immediately rose 101.5p. The deal, to be put to Britannic shareholders this month, will create the leading closed-fund consolidator. It initially creates £30m-a-year of savings but there is more to go for. Buy.

NORTHGATE

Northgate, the van rental company, has reported another strong year of double-digit earnings growth, thanks to its flexible business model and growing presence in the UK and Europe. Buy.

LA TASCA

Tapas restaurants have never taken off in the UK but La Tasca, the chain that floated on AIM in February, appears to be stealing a march. The company's profits are up by 56 per cent to £2.4m for the year, and La Tasca wants to double in size from 53 outlets in the next five years. The shares are not cheap, at 25 times 2005 earnings, but with earnings growth expected to double, tuck in.

DIAGEO

Diageo has rested happily as the world's largest drinks company for some time, but snapping on its heels will soon be the French drinks giant, Pernod Ricard. Nor has a trading update from the company caused much fizz. Even so, Diageo's sheer scale and breadth of market coverage in the drinks market means its shares are worth holding on to.

AGA FOODSERVICE

Thanks to the Nigella Lawson-inspired craze for donning a pinny, demand is soaring for the ultimate in cookers: an Aga. However, with just over half of Aga Foodservice's business reliant on the cash-strapped consumer, the company is exposed to the high street slowdown. Sales at its Fired Earth paints business are down 5 per cent too. Bank some profits and keep a few shares on the back burner.

KENSINGTON GROUP

As the housing market grinds to a halt, mortgage lenders have suffered - new home loan business across the market was down 14 per cent during the first half of 2005. Kensington Group, however, has bucked this trend. And as the bigger lenders become nervous about bad debt levels, the adverse niche will expand. The shares are good value.

The above are recommendations from the daily Investment Column.

Acquisitive Irish building company is an attractive buy

The acquisitive Irish building materials group CRH continues to push ahead with its growth strategy. It began buying businesses 25 years ago and has not stopped since. It now has operations in 24 countries.

CRH was formed in 1970 through the merger of two Irish companies, Cement and Roadstone. Sales have grown from €26m (£18m) in 1970 to €12.8bn (£914m) last year.

Profits broke through the €1bn barrier last year and CRH issued another convincing trading update this week. It expects to see percentage growth "in the high teens" in first-half pre-tax profits and further progress in the second half.

But while the US is firing on all cylinders, its European operations remain sluggish. The company may also be at risk from the recent spike in oil prices, which will drive up costs. Another danger is a marked increase in asbestos claims in the US.

But trading at seven times 2005 earnings the stock compares well with some of its rivals, and remains a buy.

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