The Investment Column: Keep Aggreko on hold for fear of a global slowdown

Unite Group; Shed Productions

Our view: Hold

Share price: 287p (-14.25p)

Aggreko set up a 100-megawatt power station capable of delivering enough electricity to light nearly 300,000 homes in Kenya earlier this year. It took the group just 4 weeks to build the plant, which runs on diesel, and it now generates 10 per cent of the African country's electricity.

A power crisis in a developing country such as Kenya can set its economy back years. Without Aggreko there was a real danger of the lights going out in Nairobi. The company shipped its generators to Mombasa and then transported them by train to the capital to save the day. Such was the temporary power group's success that the neighbouring countries Uganda and Rwanda have since been in touch.

Of course, Aggreko does not do all this for free and as yesterday's interim results show, the company makes a tidy profit from it. Profits at its International Power projects operation (servicing the developing world) soared 20 per cent to more than £10m. Meanwhile, the remainder of the company's operations, which provide power generators on a much smaller scale for venues such pop concerts and film sets, are also booming.

Overall, Aggreko boasted a 78 per cent rise in pre-tax profits to £29.6m for the six months to the end of June. The performance of its North American division benefited from $32m of one-off revenues relating to the surge in demand that it enjoyed following last year's particularly severe hurricane season.

Although the hurricane season has so far started quietly - this time last year the US had suffered two very large ones - trading at Aggreko is so strong that its second half performance should come in well ahead of that seen in 2005. As a result, the company yesterday urged City analysts to upgrade their full year forecasts. Brokers now expect it to make a profit of around £75m this year, compared to £68m previously.

This leaves Aggreko shares trading at around 16 times forward earnings, a far from demanding rating given the momentum behind the business at present. However, a word of caution. The bulk of the group's operations (those excluding the services it provides to the developing world) are highly sensitive to the global economic cycle and any slowdown could have a significant impact on Aggreko profits.

Unite Group

Our view: Buy

Share price: 415.75p (-5.25p)

Student numbers are expected to rise by 125,000 over the next four to five years. Nearly 80 per cent of Britain's full time university students live away from home. Today universities only manage to satisfy a quarter of student demand for accommodation.

Given these statistics, it is no surprise that business is going very well at Unite Group, the UK's biggest provider of student accommodation. It is simple economics. The number of students going into higher education is rising and there are not enough places for them to live.

It is estimated that an extra 28,000 bedrooms will be required every year until at least 2010 to meet the growth in student numbers. Currently there are 15,000 beds added annually. The shortfall is likely to get worse following April's Housing Act, which forces landlords to become licensed and meet minimum standards.

Interim results from Unite yesterday saw a 15 per cent rise in its net asset value to 365p per share. It is on course to deliver 4,276 new bed spaces this year and another 4,000 in 2007. Analysts expect the group's net asset value to hit 412p per share by the end of this year and 481p next year. Given the economics of the industry in which it operates, there seems little to stop it hitting these targets.

Shed Productions

Our view: Avoid

Share price: 131p (-5.5p)

There can only be one question on the mind of anyone holding shares in Shed Productions at present. Will the television production company be re-commissioned by ITV to make another series of Bad Girls? An answer is expected from the broadcaster by the end of the month and if it is negative Shed stock is likely to plummet given the series accounts for about 15 per cent of group profits.

Reports in the trade press earlier this summer suggested that it would not be re-commissioned. But the ratings for the current series of Bad Girls have been strong since then, which is good news for Shed's case. The company said in a trading statement yesterday that it is impossible to call ITV's decision.

Meanwhile, Shed, which is also behind Footballers' Wives, is focused on developing other programmes. It is working on a number of major drama series for broadcasters in the UK and US. On this side of the Atlantic, it is looking to sell them to the BBC, ITV, Sky or Channel 4.

Nevertheless, in the short term, all eyes are on Bad Girls. Investors would do well to avoid the stock until we hear the verdict.