The Week In Review: This cruise giant looks unstoppable

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The Independent Online

Carnival Corporation sailed into uncharted waters when it pulled off its hostile bid for P&O Princess Cruises in 2003. It became the world's biggest cruise ship company and the first to be listed on both the London and New York stock exchanges - and has been in cruise control ever since.

Carnival Corporation sailed into uncharted waters when it pulled off its hostile bid for P&O Princess Cruises in 2003. It became the world's biggest cruise ship company and the first to be listed on both the London and New York stock exchanges - and has been in cruise control ever since.

Miami-based Carnival controls more than half of the cruising market. The company has put further water between itself and rival Royal Caribbean, raising expectations for the amount of money it gets from each passenger. It seems the lure of cruising - all those endless buffets and cabaret shows - has outweighed any negative impact from the Aurora, which got no farther than the coast of Devon last month. The Aurora is one of its 77 ships.

There is always a risk that fuel costs will spiral faster than expected, but with the market growing so strongly, the shares, which have doubled since Carnival swallowed Princess, still look worth splashing out on.

COMPASS

There is nothing wrong with having a global catering giant, as long as it is largely managed locally, and there are some advantages in getting better deals from suppliers. But we have dismissed the key financial question - why is Compass making less money from its investments than the investment costs? - as being only a temporary issue. Belatedly, management's bonuses are tied to cash flow and return on equity targets, but confidence can be rebuilt only piece by piece. Wait before moving.

ROYALBLUE

Royalblue's software is used by the world's leading investment banks for trading equities, and for an increasing number of other functions, including financial information. The company has spent hard on product development and is also making progress with a new suite of products for trading the more complex financial derivatives beloved of hedge funds. Buy and tuck away.

AB PORTS

Southern ports are congested and Associated British Ports, which handles 25 per cent of the UK's seaborne trade, is dramatically increasing the scale of its operations on the Humber. Investors are starting to look through a dull 2005 to the opening of two new projects in the area next year. Hold.

ST MODWEN PROPERTIES

St Modwen's speciality is the refurbishment of rundown assets such as high-street shopping centres or old factories. It has managed to - and continues to promise to - double the size of the company every five years. It must seek bigger and more complex projects and widen its geographical scope in the UK if it is to continue its achievements, and now seems a good time to take profits.

RENSBURG

Shares in Rensburg, the boutique asset manager, have been suspended for the past two months, as the group plans an ambitious reverse takeover of Carr Sheppards Crosthwaite. Although investors will be compensated for the large issuance of equity needed to fund the deal with a special 45p-a-share dividend, Rensburg's recent swift rejection of a 610p-a-share offer by Rathbones could be a big mistake. If things stay as they are, take the 45p and run.

PREMIER OIL

Mauritania is one of the exciting unknown quantities in the oil world. Companies with interests in this West African country have, in recent months, caught the attention of investors in a big way. Premier Oil, a London-listed exploration and production group, released a positive drilling update from its interests in the country this week, which may make Premier a takeover target. Hold.

RAC

A peek under the bonnet showed not everything at RAC was firing on all cylinders in 2004. Membership numbers were flat last year, while the renewal rate fell. Its consumer division, which aims to sell RAC members other financial products, from car insurance to legal advice, is spluttering. Investors should seek their thrills elsewhere.

PRINTING.COM

This has made great progress in spreading stores specialising in leaflets, letterheads and business cards. Unlike its rivals, Printing.com sends all orders to one printing centre to reduce costs. Some new franchises have had delayed openings, but long-term prospects look solid, with plans for extra printing and an updated IT system. Buy.

ELEMENTIS

When the US banned a chromium compound containing arsenic from wood preservatives in 2004, Elementis, which specialises in such compounds, knew it would be a difficult year. It was also hit by a weak dollar, rising raw material prices and energy bills. But chromium prices are on the up and costs are falling. Hold while the increases gather pace.

DIAGEO

Half a million people reach legal drinking age a year in the US, creating hordes of new potential customers for Diageo, the drinks giant. Success here has offset declines in Europe over the past six months and the high cash generated by the business will sustain returns to shareholders through buybacks. A long term hold.

BHP rides high in mining boom

Record turnover, record earnings growth, and a record share price to match. It is boom time for the mining giants, and for none more so than BHP Billiton.

This company has an ideal mix of assets, unusual among its peers for having about a third of business in oil and gas, where prices have remained stubbornly high. Coal, too, has surged, and base metals prices hover around two-decade highs.

This is not just a story about China, which accounts for 10 per cent of BHP's earnings. Of course, this has been a significant engine of growth for the company, and the whole group benefits from the higher commodities prices that incremental demand from China is causing. But BHP shares need not go up and down with every word from a Chinese minister about growth in that country.

In all likelihood, the Chinese economy will continue to expand for many years, and the supply/demand ratio for commodities is unlikely to tip away from the miners' favour, at least until large numbers of new projects come onstream towards the end of the decade.

BHP has "re-based" its dividend, and that is no euphemism for a cut. The payout has been raised by 69 per cent, a strong signal that it expects the current level of cash inflows is sustainable.

Buy for the long term.

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