The Week In Review: Wise buys mean clean profit

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The Independent Online

The household products group Reckitt Benckiser is scrubbing up well. Latest trading figures have prompted it to raise its already ambitious targets for the year. It will take an unexpected disaster for things to go down the pan now.

There are three pleasing aspects to the performance. First, the improvement is broadly based, with Dettol disinfectant, Finish dishwasher detergent, Airwick air-fresheners, Calgonit scale-remover and Wax Strips hair-remover all cleaning up. Second, the juggernaut shows no signs of slowing. And third, Reckitt's main market of western Europe was especially strong. The wisdom of buying raw materials at good prices early in the year helped profit margins, which meant more cash for advertising without squeezing profits.

In May, we advised readers to wait until the shares dropped a little before buying. Those who took their chance in July are now 200p to the good.

Reckitt should be a core holding in any portfolio, but investors face a dilemma similar to the one in May. The good news has already moved the share price a long way. Again, there may be better chances to buy as the impact of the results wears off. Do not miss the opportunity when it arises.


Antisoma has a rich sugar- daddy in the shape of Roche, the Swiss pharmaceuticals giant, which is bankrolling trials of Antisoma's potential blockbuster drugs. That makes it one of the least risky biotechs. Savvy analysts say Antisoma shares could double if its first drug, for ovarian cancer, is successful, or halve if it is not. Given the probability of success is reckoned at 65 per cent, that looks a gamble worth taking.

Dairy Crest

Investors have lapped up Dairy Crest's focus on branded products, such as posh spreads and yoghurts. Clover and Utterly Butterly led the charge, and the group hopes to work similar magic with the relaunch of St Ivel Gold and Vitalite. Although milk remains as low a margin business as ever, the merger between Express Dairies and Arla should pave the way for Dairy Crest to pick up business from supermarkets. The shares have further to go.


Dicom offers companies a service which collects all their documents, electronic or paper, and stores them centrally. Its technology can help companies save money by making offices more efficient, but it is hardly a reinvention of the wheel. Sales have risen despite the tough climate, but Dicom is still not confident enough to put a material value on its order book. Not tempting.

Northern Foods

Northern Foods ousted its chief executive in September when profits headed south. The company, which makes Goodfellas pizzas and Fox's biscuits, and is a leading supplier of ready-made meals to the big supermarkets, has basically been run as 18 autonomous units, so there is scope for big efficiency gains from a programme of restructuring. Hold.


Uniq has sorted itself out after years of restructuring, abandoning the old Unigate dairy business to focus on making ready-meals under supermarkets' own brands. The easy gains have been made now, and future efficiencies require investment in sandwich-making robots and the like. Suppliers to the mighty supermarkets face a continual squeeze on profit margins, so the share price looks high enough. Sell.

Business Post

Business Post, the little parcel delivery group, is ready to break into the Royal Mail's postal monopoly next April. The company plans to pick up, sort and transport mail from large companies with lots of post, but can take them only as far as a local Royal Mail office. The regulator, PostComm, is to rule before 2004 on the exact figure Business Post must pay for final delivery by the Royal Mail. This and other new ventures justify the share price. One to tuck away.


Renold is suffering the effects of a downturn in the sale of its chains and machine tools to economically sensitive industries. A trend in car manufacture from using belts in engines to using the Renold durable chains - plus a dividend yield of more than 5 per cent - gives some support to the shares. But they are expensive relative to earnings and not compelling value.

Young & Co

Young & Co are anything but. The Wandsworth-based brewery claims to be Britain's oldest, and for years the family-controlled company, chaired by 82-year-old John Young, has adopted selective deafness in the face of attempts to force change. Times are changing - a bit - and more money is being spent on sprucing up the 200-strong pub estate and on advertising Young's Bitter. But until the family shows signs of relaxing control, the shares are unappealing.

BOC Group

The welders of Madison County have cast a shadow over gases group BOC. Having been exposed to fumes from rods containing manganese, they successfully argued in their local Illinois court that BOC had rendered them susceptible to Parkinson's disease. Despite the litigation, BOC is a solid set of businesses with potential to benefit from global economic recovery. Existing shareholders should hang on but new investors should wait for the shares to settle.

Mersey Docks & Harbour

Mersey Docks & Harbour is developing its Princes Dock, Liverpool, and Central Docks sites for housing and already has a nice income stream from office space it owns at its ports. The ports business is looking up after being impacted by the slowdown in global trade. The container terminal in Liverpool moved to a five-day week because of increased volumes and container services are expected to start up next year. Buy.

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