The Week In Review: Wiping the floor with Reckitt stock
Saturday 11 February 2006
Reckitt Benckiser the cleaning-products company outshone its rivals in the consumer-goods world with another set of sparkling results this week. Doubts that the soaring cost of raw materials in 2005 had hampered the group's progress Vanished after Reckitt announced that it had Finished the year by hitting its 20 per cent operating-margin target one year early.
Reckitt, whose products seek to make our homes shine brighter and whiter, is set for another year of industry outperformance, with the aim of delivering operating margins of 22 per cent by 2008.
Shareholders in the group have cleaned up since it was created just over six years ago by the merger of Reckitt & Coleman with Benckiser of the Netherlands. For the year, the increase was 6 per cent to£4.2bn, which delivered a 16 per cent increase in pre-tax profits, to £876m.
The only headache for investors is that the group's markets in western Europe are growing more slowly than they have done for years. The tough trading backdrop combined with the challenge of integrating the Boots acquisition gives less clarity than usual about the outcome for 2006.
Shares in the group trade at a hefty 17 times 2007 earnings. But that looks well deserved. Keep stocking the bathroom cabinet.
The billionaire Reuben brothers have in recent months been steadily building up a stake in Ultimate Leisure via contracts for difference. On Tuesday, the duo converted these derivatives into actual shares, and now control 29.9 per cent of the bars and nightclubs group. Ultimate's asset backing means that there is little downside in the shares and, once trading starts to pick up, they should start to motor. Investors would do well to follow the lead of the Reuben brothers and buy.
An animated version of Warren Buffett has joined Inspector Gadget and the Care Bears as one of the characters that DIC Entertainment aims to promote. The group plans to create a series called The Secret Millionaires Club in which the legendary investor will teach children The slot will not only boost DIC's financials but will also enhance the group's profile across the Atlantic. At 256.6p, the stock trades at a discount to rivals. Buy.
Despite delivering a 30 per cent rise in annual profits, Quantica remains one of the cheapest stocks in the recruitment sector. Adjusted pre-tax profits rose to £3.6m, compared with expectations of £3.3m and up from the £2.4m delivered this time last year. However, its shares trade at just 9.4 times forecast earnings for 2006. Buy.
Despite the much-publicised slowdown on the high street, sofa retailer ScS Upholstery has gone from strength to strength. Analysts expect ScS to meet City profit targets this year - pre-tax profits should hit £18m, up from £15.6m in 2005 - and the stock trades at 11 times forward earnings, a premium of 20 per cent to Land of Leather, its only quoted rival. Even so, hold on to the company, given recent speculation that a special dividend could be on the cards.
After the £285m purchaseof US rival Verity in November, the Autonomy group has become the world's biggest provider of software allowing companies and governments to search the mounds of information that they receive on a daily basis. Though the shares trade at 32 times forward earnings, this is not expensive given the growth potential of the market and the company's operational gearing. Buy.
Takeover speculation again gripped the tobacco sector this week and the "hot money" is betting on a bid for Gallaher from Japan Tobacco (JT). On its own, Gallaher is not an enticing proposition. In the UK, from where the group gets 50 per cent of profits, it is up against falling sales as smokers shun its premium brands in favour of cheaper alternatives. And, in the coming years, the UK is set to become even more challenging as government smoking bans come into effect. Still, given the present mania for M&A deals, an offer - probably from JT - might not be far away. Hold.
Although Chrysalis's trading was positive for September and October, it showed a 6 per cent decline for the remaining three months of the year. However, as the company goes forward it will find itself up against increasingly favourable comparatives and should soon start to register growth. Hold.
Torex sells a wide variety of technology to retailers ranging from store tills to back-office systems. Despite concerns about acquisitions and company strategy, investors should give Torex the benefit of any doubt, especially given the lowly rating of its shares. They trade at just 13 times forecast earnings for 2006, which is far too conservative for a company tipped to deliver a near 80 per cent rise in profits for that year. Buy.
The above are taken from recommendations in the daily Investment Column
Yell buoyant on US earnings despite UK inquiry doubts
Investors seem unconcerned by the Competition Commission's inquiry into Yell's dominance of the UK printed directories market. Although its shares were sold off sharply when the referral was announced in April, they have since recovered these losses and gained nearly 20 per cent.
Third-quarter results highlighted just how well the company is doing in the US. Last year's £800m purchase of the directories business Trans-Western not only diversified it away from the UK, but also gave the company exposure to a fast-growing market.
In the first three quarters of its financial year, Yell registered an impressive 51 per cent jump in sales. It is now the biggest independent directories player across the Atlantic and is competing successfully against the services offered by telecom giants such as AT&T and Verizon.
The growth Yell is enjoying in the US is unlikely to dry up soon. This potential makes the rating of Yell stock, 13 times forward earnings, look conservative. But given the uncertainty generated by the Competition Commission investigation, it is appropriate for now. Hold.
Mark Dampier: 'We're on our own in retirement. They've pulled pensions to pieces'
Donald MacInnes: 'I have to have £500 a month spare from now until at least 2035'
HSBC becomes first bank to offer five-year fixed rate mortgage with interest rate under 2%
Crippling PFI deals leave Britain £222bn in debt
Pension freedoms: How to deal with cold calls from scammers
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Professional big game hunter Ian Gibson crushed to death by elephant during hunt
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...
Day In a Page
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000