William Hill's international aspirations were probably the most interesting part of this week's trading statement from the UK's second biggest bookmaker. The group revealed that it and its Spanish partner, Codere, plan to apply for a sports-betting licence in Madrid and raised the possibility of rolling out operations in Latin America where Codere also has a presence. In 2006 the bookie received a boost from the World Cup and emerged £17.5m better off. At 14 times forward earnings, William Hill is a good long-term bet. Buy.
A research note from Dresdner Kleinwort makes British American Tobacco sound like a great blue-chip play. The broker believes that in its annual results statement on 1 March BAT could well herald a further round of cost cuts across its business. This would leave the company in a position to return substantial sums of money to shareholders. Although BAT has seen its value rise by two-thirds in the past two years, there is plenty more upside in the stock. Buy.
Arc develops technology used in semi-conductors which in turn power electronic devices such as digital cameras and laptops. Results in the group's second half have exceeded forecasts, and sales should come in at about £13.3m, a 46 per cent increase year on year. The broker Panmure Gordon expects the company to break even next year. Hold.
About 3,000 staff at the upmarket estate agent are set to share a bonus pot of about £90m after a surge in home and commercial property prices in the south-east of England in 2006. The pot this time last year was worth £80m, and the year before £70m. Analysts expect it to post a pre-tax profit of £70m, up from £57m last time around. Although Savills shares have risen tenfold in the past four years, now is no time to be bailing out.
INTER LINK FOODS
Inter Link Foods this week disappointed the City with its interim results. The cake and pastry maker reported a pre-tax loss of £1.6m for the six months to 4 November, compared with a profit of £2.5m for the same period last year. Sales dropped 7 per cent to £62m. However, the shares are trading at just nine times forward earnings, which is far too low a rating. Buy.
ReNeuron is a pioneer in the area of stem cell research. It filed for approval with the US Food and Drug Administration to begin clinical trials for its groundbreaking stroke therapy ReNOO1 in December. The news sent its shares up sharply. However, investors took fright this week when the FDA said it had placed the study on hold. Shares dropped 15 per cent. The company is without doubt a high-risk bet, but is one worth sticking with.
Rathbone Brothers has been growing at lightning pace over the past decade. Having developed some top-class fund managers, the group's boutique asset management arm has become a favourite with financial advisers over the past few years, and has seen its assets multiply. Buy.
Marshalls has been making paving products since the late 1890s and is one of the UK's leading players in this business. Analysts are predicting a rise in UK construction output this year and Marshalls is perfectly placed to benefit from this. Should the domestic market enjoy a rebound, Marshalls' earnings estimates could start to look conservative. Until then, however, at 19 times forward earnings, the stock is just a hold.
HARDY OIL & GAS
Hardy Oil & Gas was described as "possibly the next Cairn Energy" when it floated in 2005. The shares gained ground this week after the AIM-listed group boasted of a new oil discovery at its Cauvery Basin field. Although the company is a long way from repeating the success of Cairn, its stock is worth a punt.
Mark Coombs, the chief executive of Ashmore, netted £170m from the float of the emerging markets asset manager in October. But is there more upside for investors? The answer to this is probably yes. Ashmore enjoys above average earnings growth, as well as high cash generation, which leaves plenty of room for increased returns to its shareholders. Hold
UK Coal owns what is left of England's coal industry. For the year to 31st December 2006, the Doncaster-based company will post a pre-tax loss of £33m which although is an improvement on the £62m deficit it revealed in 2005 is still pretty bad. Still, the current worth of its land bank is £343m, and once it is fully developed this figure could rise to well over £800m. Given the whole of UK Coal is valued at £660m, hold.
Ark Therapeutics is leading the way in gene therapy. The healthcare company specialises in vascular disease, wound care and cancer - all growing markets with opportunities for high rewards. Fund management giant Fidelity recently invested in the company and holds a 4 per cent stake. Worth a punt.
The above recommendations are taken from the daily Investment Column.Reuse content