A victory for computer games

There is more than the odd whiff of blood on the nation's high streets, following Sears's and Argos's downbeat Christmas trading statements. However, down among the tiddlers there have been some pockets of optimism.

Electronics Boutique, the computer games retailer, last week disclosed that like-for-like sales in December were 30 per cent higher than in December 1995. For the 11 months to 4 January, sales are up 39 per cent on a like-for-like basis.

The former Rhino Group - which was a disaster for shareholders and is now under new management - opened four new stores in the year, and is pressing firmly ahead with a refurbishment programme for the other 63 shops.

A confident Joe Firestone, Chairman and President of Electronics Boutique in the United States, which owns 24.6 per cent of the UK shares, says confidently that: "Last year's loss of pounds 8.5m will be history." Although the market in which Electronics Boutique operates is inherently volatile, it merits a speculative buy.

Excitement in the oil and gas exploration sector continues unabated. Last week it was the turn of British Borneo Petroleum to announce an upgrade of oil and gas reserves and production rates for BBP's Morpeth field in the Gulf of Mexico. The result was a 50 per cent revaluation of the company's net asset value.

The shares put on 92p at the news and now stand at 1021p. However, there is little to suggest the excitement is over yet, and the shares remain a buy.

On the biotech front, Celltech has been on a gentle decline since its shares peaked at around 650p last year. Given the company's strong rise over the last two years, it is no surprise that some holders have been eager to take profits.

However, profits are a realistic possibility in the 1997-98 financial year, with revenues surging to upwards of pounds 200m by 2004, on some City estimates. Approvals for clinical use of its septic-shock drug and an anti-leukaemia drug are both likely by 1998.

The group has arranged a web of profit-share agreements and royalty rights, which give it some decent defensive qualities, and, in so far as it is possible with a research start-up operation, limits the downside. Buy.

The fight between William Cook and Triplex Lloyd has moved into the closing stages, with both sides refusing to throw in the towel. The bid is in some disarray after the Office of Fair Trading decided between Christmas and New Year to suspend the normal bid timetable while it decides whether to refer the offer to the Monopolies and Mergers Commission.

However, despite concerns over the corporate governance, or rather the lack of it, espoused by Andrew Cook at William Cook, shareholders can be satisfied that he has proven, if nothing else, that the offer, at pounds 3.10 in cash and shares, or pounds 2.95 in cash, seriously undervalues the business.

The dilemma for Graham Lockyer at Triplex Lloyd is by how much the offer will have to be raised to persuade the institutions to relinquish control. There are suggestions that Triplex Lloyd, in its last document, was already devising an escape route if it felt it had to almost double its offer - which would be an unprecedented move. William Cook shares are at 357.5p and the OFT says it will report by the end of the month.

Normally, shareholders should hold on to shares under these circumstances- but there may be a case to sell now, in case Triplex were to walk.

However, if the William Cook forecasts stand up, and there is a sustainable improvement in the business over the next two years, there is every reason to hang on anyway.

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