The Week In Review: Turbulent times ahead for EasyJet

Shares in EasyJet crashed this week after it admitted it was struggling to fill its planes. EasyJet attracted 2.9 million passengers in December, a 9.9 per cent increase. However, what sent the shares into a tailspin was news that the all-important load factor – how full the planes are flying – actually fell by 2.2 per cent to 78.9 per cent. EasyJet hopes to generate extra revenue this year from new baggage charges and fees from other services, but its own estimate of 20 per cent profit growth for 2008 looks ambitious. Sell.

MICHAEL PAGE
The white-collar job finder Michael Page looks better equipped to cope with a global slowdown than during the last shake-out in the early Nineties. The business is growing at an impressive rate. Fee income for the final quarter of the year rose by over 37 per cent, with gross profit for the year up a similar amount. The group is dependent on confidence – the sort which encourages an employer to take on new people. But that is in short supply at the moment, especially in the UK. Still, the 60 per cent fall in the shares over the past six months. looks overdone. Buy.

JESSOPS
Over one of the toughest Christmas trading periods in years, the camera specialist Jessops achieved the near-impossible – it managed to increase sales. That is quite a performance considering the miserable time it has had since floating four years ago. However, one swallow does not make a summer and Jessops needs to sustain the improvement. Even at 8.3p, against a float price of 155p, the shares are no more than a punt. Avoid.

STAFFLINE
Staffline is a leading supplier of blue-collar contract labour, primarily to the food industry. Profits for the year just ended are likely to have risen by 30 per cent to £4.4m. An upbeat trading statement said there was a strong pipeline of opportunities pointing to further progress in the current year. Staffline offers reasonable value at 7.6 times 2008 likely earnings.

HICHENS HARRISON
Hichens Harrison is the City of London's oldest firm of stockbrokers. But the firm is now reaching out, forging new trading links within a number of overseas markets. The company said this week it expected to finish 2007 with a significant increase in turnover and profits, pushing the price higher and leaving it well up with events for now. Hold.

RICARDO
British firm Ricardo is one of the world's leading automotive engineering consultants. A high-octane performance for the opening five months has put it on track to deliver profits of £13.5m for the full year to next June. Ricardo is serving a multinational industry being forced to spend heavily in order to adapt to environmental and legislative changes. The shares belong in the fast lane. Buy.

THE RESTAURANT GROUP
Shares in The Restaurant Group, which owns chains such as Garfunkel's, crashed 31 per cent after a profits warning last month. But sales growth in the final quarter only slowed to 1 per cent, giving an overall improvement on the year of 5.5 per cent – its best performance for 10 years. At 119p, the shares are now extremely cheap. Buy.

VANTIS
Vantis offers a range of tax and accountancy advice for firms and wealthy individuals. The present climate is tailor-made for it to grow its business recovery side. However, it has been unable to find any suitable acquisitions. Estimates of around £13.5m leave the shares on just over eight times earnings. An acquisition should inject more excitement into the price. For now, hold.

GREGGS
Greggs the bakers sells comfort food such as pasties and doughnuts for people on a budget. So in these belt-tightening times, it is no surprise to see Greggs unbuckle a strong second-half increase in sales. However, a good part of the increase was down to the rising cost of key ingredients such as wheat and dairy. If this is stripped out, the numbers will not look as impressive. Rising costs have troubled Greggs in the past. Hold.

PREMIER FOODS
Shares in Premier Foods are half what they were in late 2006. Although analysts keep reminding the market of the value of the company's iconic brands such as Hovis, the bread business has been toasted by the soaring price of wheat. Even at current depressed levels, the stock looks vulnerable. Avoid.

LEGAL & GENERAL
The slowdown in the housing market has proved tricky for Legal & General, a leading provider of mortgage insurance. But sales of critical illness protection policies have held up and it has seen substantial increases in sales of bulk annuities. Despite its size, L&G has shown it has the nimbleness to develop new lines of business when conditions get tough. Hold.

MEARS
The nation's stock of council homes clearly need some serious care. The amount of work due to be carried out by Mears, which does much of the repair and maintenance, is now £1.4bn. It means it will be working close to capacity for the next two years. The shares are not expensive. Buy.

cash@independent.co.uk

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