The Week In Review: Well done Standard Life; now, it's time to take some profits

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The Independent Online

The Scottish insurer Standard Life is a totally different company to the basket case that teetered on the brink of collapse three-and-a-half years ago. Since then, chief executive Sandy Crombie has slimmed down the workforce, begun putting profit before volume and done away with the group's mutual status to ease access to capital.

Since its flotation last July, things have continued to go to plan. Changes to the pension regulations last April have been a boon to new business and profits across the whole life insurance sector – not just at Standard Life.

Members who held on to their windfall shares when the company floated should be very happy, and will be in line for another handout this summer. This, however, may be the time to take some winnings off the table.

With the effects of the pension regulation changes now fading, the next few years may well be tougher. After such a strong run in the share price, it is now hard to make the case for any further short-term upgrades in the stock.


Since its flotation in October last year, SSP shares have risen a remarkable 45 per cent, yet the company has not appeared on many radar screens. That is likely to change with SSP's acquisition of rival Sirius Financial Solutions, a deal that expands the company's product line and reach. Insurance software has proved a tough environment, but SSP could yet prove that it is a lucrative sector. With a number of investment houses alerted to the company's potential on the back of the Sirius deal, this could be a good time to buy the shares.


Upmarket estate agent Savills has been in rude health as ever-larger City bonuses and an influx of foreign investment have helped to drive London property prices up to become the highest in the world. At this week's AGM, management reassured shareholders that there was plenty more to come. Should the top end of the residential property market falter, however, the group's wealth management arm should still prosper. As stock markets correct, the attraction of tangible assets such as property always increases. At 15.7 times this year's forecast earnings, the stock trades well below many of its peers. Buy.


N Brown, the Manchester-based catalogue group that specialises in plus-sized clothing for mature women, proved this week that there's big money to be made here, posting a 21 per cent rise in annual pre-tax profits. Although its shares have had a wobble recently, these full-year figures will reassure investors. With the UK population ageing and expanding, literally and figuratively, and with no serious rivals in this space, N Brown remains a buy.


Prodesse, an investment trust, makes its money by borrowing from banks and using those funds to buy US mortgages through mortgage-backed securities, making a profit because it can borrow at cheaper rates than the interest paid out by the securities. What Prodesse does is by no means risk-free; the recent rises in US interest rates squeezed its margins. But with many predicting that US rates will fall, the reverse should occur. Prodesse shares offer a prospective annual yield of 6.5 per cent – highly attractive. Don't bet the house, but income seekers could do worse.


Vanco, the "virtual" business telecoms provider, this week signed a lucrative new deal with T-Systems, the business arm of European telecoms behemoth Deutsche Telekom. T-Systems will resell Vanco's services, providing customers in 23 countries, excluding Germany, with low-cost internet connections. With £80m of contracts already banked since the start of February and the huge potential sales uplift off the T-Systems deal, the shares look good value. Buy.


Premier, the UK's largest independent food producer, again blamed the weather for a recent slowdown in sales this week. Even so, the statement mostly reassured investors after a period spent hard on the acquisition trail. Management has, so far at least, proved capable of handing big deals. With the integration costs and timetable from the last two acquisitions well on track, the shares deserve to trade on a multiple more in line with the likes of Northern Foods and Unilever. Buy.


HMV's share price looks like the Grand Old Duke of York – it marched all the way to the top of a hill, and it has marched back down again. The core entertainment business is probably in near-terminal decline. For major cd or dvd releases, the supermarkets are much cheaper. Then there's online, where HMV has a presence, but it's hardly Amazon. It's hard to see how HMV can turn this situation around. Sell.

The picture looks bleak, but Jessops could be worth a shot

The investment case at the photographic retailer Jessops is about as straightforward as it gets – either the company is going to collapse and the shares will become worthless, or it is going to survive and the shares will be worth a lot more. Rumours of interest from potential private equity buyers had little impact on the stock this week and there is no doubt new chairman David Adams has his work cut out to turn the company around.

It all went wrong for Jessops because of a dramatic fall in demand in the consumer digital camera market that caught the company by surprise. It retains a lead in the professional market, but that is a relatively small proportion of total sales.

The company is likely to break its financial covenants before the end of the summer, but with more than £53m owed to creditors, the banks will be very keen to see it survive. As will the likes of Canon and Nikon, who have few other high-street outlets for their top-end cameras and the gear that goes with them.

Jessops has warned on profits three times since the start of the year, but investors with plenty of appetite for risk should consider snapping a few shares up.

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