The market had been waiting for Tomkins's next big deal since the poorly received Ranks Hovis McDougall buy three years ago. So it was no surprise that the market warmed to the recent Gates purchase. In the year to April 1997, the shares traded on a p/e of 13 and yield 4.3 per cent which hardly reflects the quality and likely change in sentiment as Gates is bedded in.
The Trocadero is something of a blue sky investment. The leisure site, spun off from property group Burford and now quoted on AIM, is very much in its infancy. It has enormous potential, located in one of the busiest streets for London's tourist trade. A gamble at 46p on the entrepreneurial skills of the Burford team, Nick Leslau and Nigel Wray.
Jim Leng put 30p on to the price of Laporte shares when his appointment as chief executive was unveiled in August. Just over three months later he wiped all that off and more, leaving the shares 189p down at a year's low of 613p, after he announced an pounds 85m restructuring charge and profits warning. Unless trading is absolutely gruesome, Laporte can only move ahead this year.
Field Group has had a strong run in 1995 after the market finally woke up to the virtues of this maker of upmarket cartons. The shares have taken nearly two years to break decisively through the 250p issue price as worries over paperboard costs started to subside. At 327p the shares are still good value on a forward rating of under 14.
Pet City was one of the more colourful new issues of 1995 and could prove one of the most successful. When the shares were placed on the AIM in December they soared to a near 20 per cent premium. The company operates 35 pet superstores and aims to build a chain of 300 over the next eight years.
It was a grim 1995 for food companies; the sector was laid low by rising raw material prices and the hot summer. Our tip of Hillsdown is founded on the premise that 1996 can hardly be any worse. The shares fell from 200p in August to 169p by the year end.
Allied Domecq is a bet that Sir Christopher Hogg, the former Courtaulds chairman, can bring a more focused approach to this Cinderella of the drinks giants. The shares have relentlessly underperformed both the market and other drink shares and could quickly respond.
Continental Foods is the market leader in children's snacks, an area more prosperous than the ailing crisp market. It is buying a big rival for about pounds 10m. Profits last year were pounds 1.1m and more than pounds 2.2m seems likely this year.
The leisure sector will yield an ample share of the stock market's shocks and pleasant surprises in 1996. Stakis, the hotels and casinos company, is well placed to power ahead. Profits are forecast to surge more than 20 per cent to circa pounds 31m, and there is also a chance of a bid.
Picking potential winners among the big guns of British industry is, as ever, fraught with difficulties. Many of the shares are fully valued, leaving investors to pick and choose among recovery plays.
With this in mind, the Caradon building products group looks as good a bet as any. At 195p, the price is now 20p above the year's low and some 80p shy of its 1995 peak.
Allied Domecq 525p
Continental Foods 84p
Field Group 327p
Pet City 382p
Trocadero 46pReuse content