The week in review: Three of the best star buys

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The FTSE 100's 13-month high is lucky for some: Schroder and Amvescap, the UK's two biggest quoted fund management groups. It is a simple equation. The higher the market, the greater the value of the funds under management, the higher the value of the percentage fees.

Savage cost cuts at Schroder have left scope for the group to beat profit estimates, and the new chief executive, Michael Dobson, is taking the right approach in moving into specialist funds, the new fad among those who advise the UK's pension funds.

Amvescap should do well from the dramatic upswing in mutual fund investment in the US in recent months. And there is a third star in the FTSE 100 fund management firmament. The long-term growth of hedge funds as an asset class will continue, and Man Group is the most attractive of the three. It continues to pull in record-breaking sums of cash to its new funds and now manages more than $30bn of assets. Buy, buy, buy.

Body Shop International

There are signs that the ethical beauty products retailer might just have scrubbed itself clean. New IT means its 310 UK stores actually get the right lotions and potions to sell. With a new-look estate and a more pushy approach to selling its new products, profitability should now improve. Buy.


ADVFN was created to serve up news, gossip and share price information for investors and day-traders in the technology investment boom. Having battled through the bear market, the website has established itself as the market leader. Additional paid-for services and higher advertising rates are improving revenues, and a step-by-step approach to expansion in the US should also reap rewards. Buy.

MJ Gleeson

MJ Gleeson, the construction company, has had a difficult year, thanks to cost overruns on building a cement works in Buxton. Gleeson says it will no longer take on this type of project. Happily, Gleeson is also a housebuilder, property investor and private finance initiative company for public-sector works. That's an attractive range of incomes in growing markets. Buy.

St Ives

The printing group, St Ives, which produces corporate annual reports, books and DVD packaging, has had a tough time of it and has yet to see improvement in trading. Two things need to happen before St Ives finds life easier: a pick-up in corporate activity to print more merger and flotation documents, and a recovery in advertising. The shares are high enough.


A glance at the reduction in turnover over the years, shows the scale of retrenchment necessary at this unwieldy and unloved engineering company. After selling the businesses on the block in the latest disposal round, the group's sales will be £2bn a year, from more than £9bn, not long ago. There is no growth story here. Avoid.

Inventive Leisure

Inventive needs students if its vodka-drinking doctrine is to succeed. But it is growing a little less reliant. Although a bit behind its original roll-out schedule, the group has proved its trendy Revolution vodka bars can work in locations such as London's Soho and Clapham Common, away from their traditional student hubs. Buy.

Chepstow Racecourse

If Ascot is the Harrods of racecourses and Cheltenham and Newmarket are the Selfridges, the Chepstow portfolio would be the equivalent of Debenhams. The Office of Fair Trading aims to create more competition between venues, but because there are not enough horses for courses, second-tier operators such as Chepstow might find themselves losing. Await developments.

WH Smith

With three-quarters of WH Smith's retail division's sales, and almost all its annual profits, riding on how many gifts, books and games it sells from 1 November to the middle of January, there is every chance the City will again be disappointed. Avoid.

Mouchel Parkman

Mouchel Parkman is growing fast in the market for outsourced maintenance contracts from the public sector and utilities. In rail, it is doing supervisory work for Network Rail. In water, bills are to rise to pay for infrastructure upgrades Mouchel is well-placed to help plan. And in roads, it is a case of jams today meaning jams tomorrow for Mouchel, as it wins extra work on traffic improvement schemes. Buy.

Wolfson Microelectronics

Wolfson Microelectronics, the chip designer spun out of research at Edinburgh University 20 years ago, has real products, real sales and real profits. Its technology is used in consumer electronics, digital cameras and DVDs where there is enormous scope. The problem for investors is valuing a company that is rapidly growing sales and profits, but these shares are worth the gamble.

The above is a selection of recommendations from this week's daily investment columns

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