The Week In Review: Woolies waits to see what Santa brings
Saturday 03 November 2007
Tough times continue for one of the staples of the UK high street. Perhaps the only people smiling at Woolworths' woes are Apax Partners, which tried to buy the struggling chain early in 2005 at more than 50p per share. This week's trading statement was hardly the stuff of dreams, but at least the company now thinks there is a chance it could make a profit this year.
Anecdotal evidence would suggest that footfall is strengthening and, with Christmas on the horizon, the fourth quarter ought to reverse declining retail sales. The dividend is very attractive at 8.8 per cent, but it has no cover and should the company fail to move into profitability, it ought to be under threat. At the same time, management, under the leadership of the retail guru Trevor Bish-Jones, is focusing on cost-cutting and profitability and should be given more time to deliver.
However, with plenty of options in the mid-market and the chance that Woolworths could still fluff its lines, there seems to be little point in recommending a buy on the stock. The advice for investors in the stock for the long haul is to hold on and see what Father Christmas brings.
Since we last covered the housebuilder Taylor Wimpey, the housing market in the UK has pretty much ground to a halt. But if investors think things are bad over here, they ought to take a look at the US, where Taylor also has a presence. Nevertheless, it's important not to get too carried away with the bad news. This is still a company that's forecast to make more than £600m of pre-tax profits in 2008, and the long-term demographics and housing shortage in the UK still make a decent buy case for the housebuilding sector. Hold.
Biotech companies that actually make money are rare beasts, and investors looking at the sector might consider biotech services rather than the actual discovery of new drugs as a lower risk entry into the market. Celsis International is just such a company. Although at first glance Celsis might appear to be a tiddler in the biotech industry, its customers are anything but. The company is confident that it can maintain its double-digit growth record, and it has a strong balance sheet. Not for widows and orphans, then, but for anyone looking for a first foray into the biotech industry, Celsis looks like an option that is unlikely to cause too many heart flutters. Buy.
Investors in the fund management group Schroders need to ask themselves two things: to what extent were this week's strong numbers based on exceptionals, and is the valuation looking stretched? The private equity market, which accounted for much of its recent strong performance, has worsened dramatically. And, on more than 16.5 times forecast 2008 earnings, the stock is certainly at the top end of its valuation range. Although we remain bullish about the long-term prospects for global equity markets, there are reasons for investors to remain cautious in the short term. On that basis, the sensible advice on Schroders has to be to bank profits.
Wolfson makes microchips that are used in a range of consumer devices. Its customers include some of the biggest names in the industry, including Sony and Apple. Despite what looked like an excellent set of numbers this week, the market sent its shares tanking due to the weak dollar – as almost all of Wolfson's revenues are in dollars, but almost all of its costs are in sterling. Still, Wolfson looks to be heading in the right direction. Its shares are still far from cheap, but for high-risk investors this week's sell-off has created a buying opportunity.
A slice of humble pie for us, courtesy of Humberts. Just two months ago, we recommended the estate agency group as a "risky buy". Hopefully, we made the risks clear enough, because since then the shares have tanked. But much of the bad news was priced into Humberts, which runs 70 estate agents mainly in rural locations where house-price falls have not been as sharp as in London, and the stock is now cheap. Chief executive Max Ziff bought 150,000 shares this week at 40p, and while we would not encourage investors to follow suit, there is a strong case for hanging on as the market shows signs of getting over the Northern Rock shock.
Kier is unique in the UK as both a heavy construction group and a house-builder. Despite a solid order-book in its residential housing division, the company revealed this week that its sites have experienced a "notable reduction in the level of visitors" on the back of the near-collapse of Northern Rock. Although the rest of the business looks to be in good shape, there could be worse times ahead in the housing market. At this stage, having enjoyed such a strong run, investors with a tidy profit should err on the side of caution and, following this week's strong gains, bank some of it.
Valuing Lok'* Store Group, the AIM-listed operator of self-storage warehouses, depends on what you think it is. As a stand-alone self-storage business, it is very expensive, trading on more than 100 times forecast 2008 earnings. As a property company, it is incredibly cheap, trading on a 40 per cent discount to its net asset value and at a bargain basement price in comparison to its peers. Its major competitors, Safestore and Big Yellow, both trade at a premium to their NAV and at a substantial premium to Lok. With its strong balance sheet, low debt and expansion plans, a slowdown in commercial property valuations should in fact be taken as an opportunity for Lok. Buy.
Aricom, the mining group spun out of Peter Hambro Mining in December 2003, moved from AIM to the full market this week, and for canny investors prepared to take a high-risk bet the stock looks attractive. The balance sheet looks strong, and the move to the main board should see the company move into the FTSE 250 at the next reshuffle – a strong buy sign as very few tracker funds will have any weighting in the stock. For high-risk investors, the move up to the full market looks like a suitable time to tuck some away.
Unilever has an impressive portfolio of consumer staples – everything from Wall's and Ben & Jerry's ice cream, to Dove soap, and Signal toothpaste. A rationalisation of its global branding and manufacturing looks to finally be paying off, and although it is hard to believe that investors would not be better off if the company split itself up it is at least heading in the right direction. The shares trade on approximately 16.4 times forecast 2008 earnings. While that is not cheap it is a discount to Unilever's immediate peers - including Reckitt, Nestle and Proctor & Gamble. There should be improvement in the pipeline, and for investors looking for stable, low risk growth, Unilever looks a good long term bet. Buy.
Few firms were licking their lips over the onset of turmoil in the financial markets, but it meant record summer months for interdealer brokers, such as Tullett Prebon, which cashed in on the ensuing volatility. This week the group set up a new electronic broking division, while outlining a geographical expansion strategy, planning to become the first interdealer broker in Vietnam, Kazakhstan and Pakistan next year. The stock looks good value, on a price to earnings ratio of 12.3 times 2008 estimates, cheaper than rival ICAP's 16.6 times. Buy.
Any reader who took our advice last year and had a little punt on Character Group should be laughing - the stock has trebled since we first tipped it, following disposals and a refocusing of the company on its core children's toys business. There is still plenty to get excited about – Character has benefited from its licensed products, including the hugely successful Dr Who and Scooby Doo and its has just won a license to produce Postman Pat toys. The stock is still not overvalued, and with conservative forecasts, a rising dividend and Christmas rapidly approaching, Character ticks all of the right boxes for growth investors. There is still lots of potential here. Buy.
Q&A: What’s the best way to invest for our baby?
Crowd-to-let: How crowdfunding sites can give investors a slice of the property market for £500
Simon Read: 'Seven Families campaign offers an escape from financial and emotional distress'
After the election: What will Britain's financial future look like on 8 May?
General Election 2015: How you vote next week could affect your finances
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 How the language you speak changes your view of the world
- 4 The top 50 cities for young people to live in
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...
Day In a Page
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
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