The Week In Review: Wimpey is nearly safe as houses

Immigration from the European Union and further east has eased the skills shortage that has bedevilled the building industry for years.

Immigration from the European Union and further east has eased the skills shortage that has bedevilled the building industry for years. George Wimpey lauded the arrival of skilled labourers, which has driven down wage inflation and helped the housebuilder to drive down the costs of building a house. Together with rising selling prices, 2004 profits rose 19 per cent.

Wimpey is a geographically diverse company, its main UK business split evenly between the North and Scotland, the Midlands and the South. In addition, it has an upmarket housing business in the UK called Laing Homes, which is trading less well, and a US business accounting for a quarter of group sales, which has been turned around and is enjoying the still- booming US housing market.

The arguments in favour of a soft landing for the UK housing market are well-rehearsed: demand will outstrip supply and mortgages stay cheap for the foreseeable future. The bears picked up on Wimpey's warning that land prices have not begun falling, despite the expected slowdown in house prices - a situation which, if it continues, will put a big squeeze on company profit margins. But Wimpey has slowed down its land purchases in response, and the most likely scenario is that the two will come back into balance shortly. A price-earnings ratio of six suggests Wimpey shares are priced for Armageddon. But Armageddon is not likely. Buy.

MORGAN CRUCIBLE

The performance of Scottish & Newcastle, which brews brands including Fosters and John Smiths, has been as flat as a watery pint in recent years. Major cost cuts have boosted its marketing spend, increasing volumes of its key brands in the UK. But the UK and France are still tough markets, with Eastern Europe the only bright spot. Existing investors may want to hold for the income, but new buyers should get a round in elsewhere.

ULTRA ELECTRONICS

The maker of anti-torpedo devices for the Royal Navy announced a record set of results this week. Acquisitions have provided cross-selling benefits and cost savings. It has also won new contracts with Boeing and the Ministry of Defence. Sales of gas-compressor, cooling devices for missiles, shipped to the US Navy, reached record levels. With plenty of funds for acquisitions, buy the shares.

MILLENNIUM & COPTHORNE

"Nothing unimportant ever happens here," said the New York Plaza Hotel, which Millennium & Copthorne sold last year. So it has proved, as the sale gave rise to a special dividend. Across the rest of the company, revenues per available room are growing, but the rebound in hotel trade is not certain. We remain unconvinced there is more upside to come. Check out.

ST IVES

Investors in the books-to-company-reports publisher, were running for the Cornish hills this week as the group announced the surprise closure of its Caerphilly plant. The company is on a much-needed cost-cutting drive, while it suffers from intense price competition in a sluggish market. With another full financial year in the red now guaranteed, existing investors should stop their losses. For new investors, avoid.

MICHAEL PAGE

Shares in the recruitment consultancy tumbled after investors did not get the bullish statement they had hoped for. But the group has recovered from a three-year hiring slump and is keen to expand in the United States. But the shares look expensive given that most continental European economies are far from stable. Worth holding, though, to see if Europe does recover.

PLUSNET

Broadband Britain is gathering speed and PlusNet, the small internet service provider, is right in the middle of its uptake. High-speed internet connections, linked to TVs, will become the norm to buy film and music on demand. BT is working on this and has a close relationship with PlusNet. Its shares are on a racy multiple of 17 times, but deservedly so. Buy.

CAPITA

Capita, the outsourcing specialist, is already on course to make £230m out of managing the London congestion charge, and looks set to have its contract extended to 2009. It insists payment system glitches are over. Although the shares are not cheap, further growth prospects make them worth holding on to.

AVIS

Car rental companies such as Avis Europe have been on a bumpy road since terrorism threats and economic slumps have been keeping travellers at home. Avis bought loss-making Budget last year, which will take two years to become profitable. There is also little prospect of price rises in continental Europe. Avoid.

RENTOKIL INITIAL

Getting rid of rats is not a pretty business, but Rentokil Initial has had a very attractive performance history. Re-investment after two decades of scrimping is hurting profits in the short-term. But if Rentokil can reassert its brand, it could regain ground. Until the fumes of change settle, investors could get bitten. Wait for the traps to be checked before buying.

Don't lose your hat on B&B's plans

After focusing on niche mortgage lending and branch sales of other people's financial products, Bradford & Bingley is leaner and more efficient - yet it is also more exposed to trends in specialist lending. Its chief executive, Steven Crawshaw, who took over last March, has sold the bank's estate agency business. Gone too is its loss-making mortgage broker Charcol, and the company unveiled annual pre-tax profits ahead of expectations.

But Mr Crawshaw insists buy-to-let lending, where B&B is the number one player with a quarter of the market, will keep growing at a faster rate than the rest of the mortgage market. There are signs, though, that volumes are already slowing and margins narrowing. Buy-to-let investors are largely holding on to existing portfolios, but making fewer acquisitions. With interest rates higher now and rental income still depressed, the prospect of lower capital gains may deter new wannabe landlords. There is concern that its mortgage arrears have jumped and will keep rising this year.

The group is seen as a takeover target, though there is no reason why a predator would act quickly. The stock is 14 per cent higher than when we said avoid a few months back, but our view is unchanged.

Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' embraces politics, religion, warfare, courage, love and loyalty, say creators
Sport
Sergio Romero saves Wesley Sneijder's penalty
world cup 2014But after defeating the Dutch, Lionel Messi and Argentina will walk out at the Maracana on Sunday as underdogs against Germany
Sport
Scoreboard at the end of the semi-final World Cup match between Brazil and Germany at The Mineirao Stadium in Belo Horizonte
Sport
'Saddest man in Brazil' takes defeat with good grace, handing replica trophy to German fans
PROMOTED VIDEO
News
peopleThe Game of Thrones author said speculation about his health and death was 'offensive'
Arts and Entertainment
Martin Freeman and Lauren O'Neil in Jamie Lloyd's Richard III
theatreReview: The monarch's malign magnetism and diabolic effrontery aren’t felt
News
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
Extras
indybest
News
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Sport
Alexis Sanchez and apparently his barber Carlos Moles in Barcelona today
football
Arts and Entertainment
Miley Cyrus has her magic LSD brain stolen in this crazy video produced with The Flaming Lips
video
Arts and Entertainment
In his own words: Oscar Wilde in 1882
theatreNew play by the Oscar Wilde's grandson reveals what the Irish wit said at his trials - and what they reveal about the man
News
people
Arts and Entertainment
Unless films such as Guardians of the Galaxy, pictured, can buck the trend, this summer could be the first in 13 years that not a single Hollywood blockbuster takes $300m
filmWith US films earning record-breaking amounts at the Chinese box office, Hollywood is more than happy to take its lead from its new-found Asian audience
News
The garage was up for sale in Canning Place Mews for £500,000
newsGarage for sale for £500,000
Life and Style
tech
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Financial Planning Manager, Qual Accountant, £380

    £300 - £380 per day: Orgtel: Financial Planning Manager, Banking , London, £30...

    Business Analyst - Financial Services, Trading Systems, Agile

    £60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fina...

    Day In a Page

    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
    Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

    Hollywood targets Asian audiences

    The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
    Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

    Grindr founder Joel Simkhai: 'I've found love on my dating app'

    Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
    Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

    Is it time to ditch autocorrect?

    Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
    10 best girls' summer dresses

    Frock chick: 10 best girls' summer dresses

    Get them ready for the holidays with these cool and pretty options 
    Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

    Westminster’s dark secret

    Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
    A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

    A History of the First World War in 100 Moments

    Dulce et decorum est: a life cut short for a poet whose work achieved immortality
    Google tells popular music website to censor album cover art in 'sexually explicit content' ban

    Naked censorship?

    The strange case of Google, the music website and the nudity take-down requests
    Howzat! 8 best cricket bats

    Howzat! 8 best cricket bats

    As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
    Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

    David Luiz falls from leader figure to symbol of national humiliation

    Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil