The Investment Column: St James's wins from the pensions crisis

OPT can lead a new wave of energy; Tea seller Whittard of Chelsea is still failing to brew up much excitement

In the biggest pensions shake-up for almost 20 years (since Margaret Thatcher introduced personal pensions in 1988), "A-Day" on 6 April will see the present eight sets of pension rules scrapped and replaced by a single set covering every pension plan in Britain. People will be able to invest in a wider range of assets, including property and exotic investments such as wine and racehorses - although the chief executive of St James's, Mark Lund. cautioned yesterday most people would be better off sticking with a balanced portfolio.

St James's, which is 60 per cent owned by the banking group HBOS, is prospering as people live longer and are increasingly spurred into action by alarming reports that they are not saving enough for retirement. The company unveiled a 29 per cent jump yesterday in new business to £52.2m in the third quarter, beating analysts' expe-ctations. Buoyant stock markets helped propel investment sales, though growth of the pensions business declined from the record second quarter. The group maintains its target of growing new business by 15 to 20 per cent a year.

Gone are the dark days when clients shunned financial advisers like used car salesmen, after the big pension scandals of the 1990s. Mr Lund predicts A-Day will bring the individual pensions advice market back to life. The company has prepared an individual pensions audit for clients to protect them from new, high tax rates after A-Day.

St James's, whose 450,000 clients are mainly wealthy private investors, operates as a life insurer that outsources its fund management business and distributes products such as life insurance, pensions and unit trust through a partnership of financial advisers.

The stock has been one of the better life performers recently, leaving it trading on 1.57 times embedded value against 1.36 times for its peers. At 239.25p, it's a hold.

OPT can lead a new wave of energy

We know that we must turn increasingly to renewable energy, which does not produce harmful greenhouse gases.

Wind power is now a small but growing part of the energy mix. But wave power (not to be confused with tidal power) is so far untapped. The AIM-listed Ocean Power Technologies is at the forefront of trying to commercialise wave power, so that the sea will provide a benign source of electricity.

OPT has proprietary technology in its PowerBuoy, which has been undergoing development in sea water since 1997. The device bobs along the surface of the water, translating the up and down motion into electricity. Of course, you need decent waves to make it worthwhile, so the technology is not suitable for placid areas such as the Mediterranean coast. But the good news is that the British Isles are certainly suitable, along with most of the western coastline of Europe.

OPT, which has its headquarters in the US, reported its maiden full-year results as a public company this week. Contracted revenues were $5.4m (£3.1m), up 14 per cent, and losses were reduced to $0.4m, from $2.8m the previous year.

This is a young company in a young market. It has proven prototypes and contracts with the US Navy, Lockheed Martin, Total and Spain's Iberdrola. It reckons that commercialisation of the technology is five years away. According to a research note published yesterday by the broker Collins Stewart, OPT should be profitable in the 2007-08 financial year.

No one is pretending that wave power will provide most of our energy in the future, but it is not far-fetched to imagine that some 5 per cent of the UK's needs might come from waves in, say, 2020. At 91.5p, buy.

Tea seller Whittard of Chelsea is still failing to brew up much excitement

Whittard of Chelsea, the upmarket tea and coffee retailer, brewed up some excitement in July this year when it revealed it was at the centre of a putative bid battle. But then London was bombed and the ensuing collapse in sales scared its bidders away.

They probably wised up and decided it was not worth shelling out on a business that offers shoppers little incentive to visit. Yes, we are all drinking more fancy teas these days; yes, the health benefits of a different coloured tea are vaunted each day in the newspaper; but why, when the supermarkets do such a good job of selling more than just PG Tips, would shoppers need to stray into a Whittard's?

If you do want something out of the ordinary, like Yerba Mate (it's the latest thing from South America), far better to seek it out at a health food store and pick up some other culinary must-haves at the same time. And if you want a new teapot, then try a department store.

The group has not had a good year, with two profits warnings since January, and a 3.9 per cent drop in underlying sales in the 20 weeks to 16 October. Its high operational gearing means Numis Securities is expecting pre-tax profits to drop to £1.1m this year from £2.4m, recovering to just £1.3m next year.

But Whittard of Chelsea needs a 2 per cent sales improvement to achieve this, which is far from in the (tea) bag. At 74.5p yesterday, down 2p, Whittard is a sell.

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