The revitalisation of the Dairy Milk brand in this, its centenary year, was one of several success stories in a set of sales figures from Cadbury Schweppes this week. Revenue in the first half of the year was 6 per cent higher - not bad at all, considering its products are often seen as unfashionably quite unhealthy.
Todd Stitzer, chief executive for the past two years, is squaring the circle of greater investment and improved profitability by cutting costs on the manufacturing side of the business.
The most obvious threat to this happy state of affairs is from the competitive situation in the US fizzy drinks market. New Coca-Cola and Pepsi flavours will, no doubt, be increasingly aggressively marketed, squeezing the Schweppes brands.
For now, though, Cadbury Schweppes is holding its own. We said buy the shares in February 2004 at 433.5p, but now they yield just 2.3 per cent and look expensive for new investors. However, they are a solid hold.
BROWN & JACKSON
Brown & Jackson shareholders have agreed to rechristen the group ...instore (yes, including that annoying ellipsis). To go with the new moniker, the latest trading update suggests the group is on the turn, with an 8 per cent increase in like-for-like sales in the past eight weeks. Margins have been much stronger, too, but on 17.8 times earnings, the shares are too high. Sell.
There was a weary tone to this week's interim statement from Jardine Lloyd Thompson - the insurance broker's pre-tax profits are down 25 per cent on a year ago, and it is not time to call an end to the downturn. Legal troubles at its rival Marsh have helped JLT, but the shares might soon lose their other support, a prospective dividend yield of over 5 per cent. Sell.
Cookson CEO Nick Salmon has set out a coherent vision for what has often been an incoherent engineering conglomerate, but its debts are slightly too high and its trading results are slightly disappointing. This dichotomy may be one reason why the market values Cookson earnings some 20 per cent lower than it would the company's peers, but the key to restoring confidence will be resuming dividend payments. Wait.
Despite the excitement of Apax's £837m bid for Woolies, the story at the store is little to write home about - this week marked another less-than-sparkling trading update. Woolworths may be a favourite punt for the stock market's speculators, but the shares' price/earnings ratio of 12 is at a warranted discount to the sector. Avoid.
Cranswick, producer of fresh pork, gourmet sausages and delicatessen cooked meats, is enjoying significant sales growth. And despite a mixed performance from Cranswick's sandwich making, animal feed and pet food businesses, house broker Investec is still expecting pre-tax profits of £30.6m this year, up from £23.6m. A solid hold.
Last year it was the Double Decadence pizza, with its double-stacked pizza base filled with a cheese sauce, that was a hit for Domino's Pizza. This summer, it is the Cheese Steak pizza that is delivering yet another strong set of sales figures for the group. The company has the best brand in a sector that is still largely fragmented and localised, and there is plenty of growth potential. The shares are now an expensive bite for new investors at 22 times earnings, but existing investors should keep enjoying their slice.
LEGAL & GENERAL
Legal & General's first-half results were a mixed bag, but when we last looked at this stock six months ago, we advised investors to buy, encouraged by the inevitable recovery in the UK savings market, and the changes in distribution rules for which L&G looks well positioned. Although investors may be frustrated - the stock has since moved only sideways - these two themes have by no means evaporated. The business appears to need a shot in the arm, and Tim Breedon, its chief executive elect, who takes the helm in January, may prove just the tonic. We reiterate our buy rating on the stock.
British American Tobacco won't make any ethical investors' portfolios - as you know, its products kill. But if you are still reading this column, you will want to know that the company's global scale, with sales in 180 countries, puts it in a strong position. Advertising bans and tax hikes have put some markets into decline, but many parts of Asia, Africa, Eastern Europe and Latin America are still relatively new . With a dividend yield only a little over 4 per cent the shares, up 23p to 1,096p, look too high for new investors, but are a hold.
GlaxoSmithKline has suffered some inevitable disappointments and its latest half-year results showed none of the explosive sales growth that enabled rivals to blow away market forecasts. However, investors can be assured that GSK's progress is continuing. The shares commands a premium stock market rating, but it is justified. Buy
A good time to cash in, as BG hoards its money
Why is BG Group hoarding its cash? The gas and oil exploration company raised £1bn from the sale of its stake in a Caspian Sea oil field in the sprin, but it hasn't paid back any of its long-term debt. And it refused again this week to countenance giving it back to shareholders any time soon.
The market is wary of aggrandising acquisitions, which could well be on the cards. BG has been forced to look more widely for assets, since the easy-to-reach North Sea gas is running low, and is bringing on-stream some fields in Egypt and Canada.
The company talks of the need to maintain 'flexibility' to justify its apparently inefficient hoarding of cash. The market could support a big acquisition, but it is always a risk. As for the other potential need for the capital, a big step-up in spending on the development of new wells, that too could be disappointing as BP found on Tuesday when it said it would cost more to tap more complicated oil fields.
It might seem churlish to concentrate on these anxieties when BG has such a strong operational record and when it has just put out a storming set of quarterly results. Profit after tax was £275m in the three months to 30 June, up from £192m in the same quarter last year.
However, BG shares look pretty fully valued. The market is putting a high value on the production and sales growth to come, despite the risks of disappointment, particularly in the new liquefied natural gas operations. BG shares are trading within pennies of their all-time high and now is a good moment to take profits.
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