This year has been a fallow year in the international football calendar – causing difficulties for the retailer JJB Sports. No surprise, then, that this week's trading update made some investors as sick as parrots. Total revenue for the 18 weeks to last weekend was down 1.2 per cent, but sales have gone into an abrupt decline recently. In the first nine weeks of the tax year, they were actually 4.3 per cent up on the previous year.
The suspicion is people are starting to feel the pinch of higher interest rates. And despite heavy selling by the boss Dave Whelan, shares have performed strongly before tumbling more than 11 per cent yesterday.
That may have been an over-reaction and the yield is a respectable 3.75 per cent. But at 19 times forecast earnings, the shares are looking overpriced. Sell.
Small-cap telecoms company Alternative Networks is flying the flag for "altnets". In the first half, it reported a 23 per cent increase in pre-tax profit on a 9 per cent rise in sales. Its statement suggested growth will continue; the group has renewed its Vodafone and O2 service provider contracts. Hold.
The Anglo-Swiss miner has put on 61 per cent in the past year, fuelled by soaring prices for copper and nickel. Xstrata has reinvested in a major acquisition spree, spending $23bn (£21bn) to become the world's fifth-largest miner. Despite all this, it trades at only eight times projected earnings for 2007 and 2008. It looks a good bet for investors. Buy.
In this week's trading update from spread betting firm IG, revenues were up more than a third to £120m. The shares are not cheap, at 22 times forecast earnings for 2007. The prospective yield is about 2 per cent, but IG is just getting started in Europe. Use the fall as a buying opportunity.
Umeco's main customers are in the aerospace sector, but it also provides complex composite materials to industries. This week, Umeco reported sales up 13.9 per cent to £334m in the year to the end of March. Improving margins meant profits rose 19.5 per cent to £25.7m. Risks for the company include the cost of servicing debt. Still, on around 16 times forward earnings, the shares look too cheap. Buy.
Morgan Sindall is benefiting from the acquisition of Amec Developments Construction group. MS is well-managed, and the shares have been stellar performers. Before piling in, note the business has an order book of £800m but generated £27m of losses last year. The unit looks a good fit, but is by no means risk-free. Good deal, good company, but everyone knows about it. So hold the shares.
Detica is a star performer in the IT services sector. The results for the year to March show revenue up 28 per cent to £156m and pretax profit up 47 per cent to £17m. It made two significant acquisitions: MA Partners and DFI International. Nevertheless, its debt of just £8m beat expectations. The stock has had a strong run and is trading at about 20 times forecast earnings. But this is an undemanding rating that this company can comfortably justify.
This week, GW Pharmaceutical said it had started trials on a cannabis derivative that suppresses appetite. GW has had its share of bad luck, but its funding looks secure thanks to licensing deals for Sativex. The shares eased 0.25p to 91p yesterday but there are grounds for thinking that they are under-priced. Biotechs are risky, but this is one worth backing.
In its full-year results this week, the world's largest maker of catalytic converters unveiled a 10 per cent jump in profits. Converters are now compulsory in all new cars and lorries, so Johnson has been cleaning up on both sides of the Atlantic. The one major concern is its valuation. The shares have risen 60 per cent in the past two years and now trade at 18 times forecast earnings. Longer-term investors are unlikely to be disappointed, and existing investors should certainly hold on. Hold.
The owner of Yorkshire Water unveiled post-tax profits for the year to 31 March of £171.7m, up 8 per cent on the previous year, but refused to comment on rumours it is considering a bid for Pennon. Shares in the water sector have been buoyant, due to interest from private equity; Kelda could be a target for one of those bidders. It is due to pay a special cash dividend of 210p a share to investors, following its sale of Aquarion. For this reason, hold.
Wincanton calls itself "a leading European supply chain solutions provider"; essentially it is a trucker. This week, while headline pre-tax profits were barely changed, they were up 10 per cent to £35.6m when stripping out all the one-offs, and revenues grew 7 per cent. European business was a disappointment, but efforts are being made to address this. The shares offer a prospective yield of 3 per cent but, trading at 19 times 2007 full-year earnings, are by no means cheap. Still, it is worth tucking a few of these away to capitalise on the company's growth opportunities. Buy.
Positive signs of life at 'living dead' Woolies
Could Woolworths shares represent the same good value as the bargains that the store chain itself so often claims to offer?
Not at first sight: wander into any of Woolies' somewhat dowdy high-street stores and the impression is hardly one of a dynamic business. This week's trading update confirms that perception - sales during the first third of the group's financial year were down marginally on last year, though margins have improved.
The moribund performance of Woolies on the high street prompted the analyst Seymour Pierce to describe the business as "one of the living dead".
And yet, beneath those tarnished counters, certain qualities continue to shine through. Above all, Woolies' EUK business - which distributes products such as CDs and DVDs - is performing well, with sales for the year expected to reach £1.5bn.
In addition, customer response to the second Big Red Book, Woolies' version of Next Directory, has been very positive. Then there's the allure of a dividend yield of more than 6 per cent.
In the short term, a takeover bid remains possible, but even if an offer fails to materialise, a demerger is a long-term possibility. At 22.5 times 2007 forecast earnings, the shares look expensive. But there could still be value to be unlocked within them, so hold.Reuse content