Our view: Buy
Share price: 595p (+35.5p)
The wisdom is that there are few better barometers of an economy's health than the recruitment industry. There may be an element of truth in that but if yesterday's numbers from Michael Page are anything to go, by the relationship is highly geared in the recruiter's favour.
Second-quarter results were stunning - net fee income, the usual measure of performance in the sector, rose by 38 per cent to £121m, well ahead of even the most bullish forecasts. The balance sheet remains strong and the company has very little debt.
Michael Page's white-collar professional recruitment covers a vast range of industries, from finance and accounting to retail and the legal profession, and targets the £35k to £135k salary bracket. It may not be the most glamorous end of the market but it certainly appears to be the busiest.
Although perhaps best known in the UK, this is a global business. For the first time, Europe, the Middle East and Africa overtook the UK as the company's largest geographical contributor with 40 per cent of net fee income.
The company is so confident about prospects that it has increased its headcount by 12 per cent and with several key managers moving to the United States, Michael Page clearly sees much more to go for on the other side of the pond. For all that we hear about a slowdown in the US economy, its business there is 95 per cent up on the same period last year, even if it still amounts to just under 10 per cent of the total.
Even after today's rally, the shares trade on an attractive 2008 earnings multiple of 14.9 times. But if you can't say buy after a quarter like that, you'll never be able to.
Our view: Hold
Share price: 693.5p (-53.5p)
Obituaries for the British engineering industry were written a long time ago. Unable to compete against the Far East on costs, unable to compete with the US on brains and suffering from years of under-investment, five years ago anyone buying into engineers might have looked eccentric, to put it politely.
But there is life in this sector. Yesterday's five-month trading update from Cookson Group means that just because the shares have doubled in the last two years, there is no compelling reason to head for the exit.
The company operates in the materials science, ceramics, electronics and precious metals markets. It is the world's leading supplier of advanced flow control refractory products to the steel industry and also has major operations in the automotive and jewellery industries.
While the company, which derives 21 per cent of profits from the US, has been hit by the decline in the dollar, yesterday's statement hinted that it still expects a "significant" improvement on last year's performance.
But the statement was very similar to the AGM statement in May and there was not enough in it to believe that current forecasts will be beaten.
The management should be applauded for the turnaround in its fortunes, but there is little dividend to speak of and the current valuation looks fair. Cookson trades at a slight discount to its peers, 13.5 times forecast 2008 earnings, but for new investors there are enough question marks to mean that there may be better growth prospects elsewhere in the sector. Hold.
Our view: Risky buy
Share price: 122p (+16.5p)
We picked Energetix Group as a stock to watch back in October and it has since trebled in value. While investors should tread cautiously - it still doesn't make any money - the potential remains huge.
Energetix announced yesterday that it had completed field tests for one of its flagship products designed for household boilers. The system, called Genlec, is designed to generate electricity at the same time as providing heat in what is called a combination power and energy boiler. Essentially, consumers will be buying electricity for the price of gas, which is almost three times cheaper.
Genlec is attractive for green consumers as the gizmo is expected to cut household carbon emissions by a tonne per year. Now Energetix has a product that works, the trick will be getting traction in the market, whether through targeting customers directly or negotiating a deal with a boiler manufacturer.
Energetix faces a battle for the combined boiler market, but its technology is more conventional than its rivals and should be available earlier. It should be on the market from mid-2008, allowing it a free run at an industry that shifts 1.5 million units per year in the UK alone.
The company's other principal business is in providing uninterrupted power supply services. Products have been successfully tested and it awaits its first orders, potentially providing another lucrative revenue stream. It is a difficult company to accurately value, but could prove a canny investment.Reuse content