The Investment Column: Take profits at DIY group Travis

Avoid Carter & Carter for a little while longer; Tune in to Autonomy's new software for TV

The shareholders of Travis Perkins, the builders' merchant, voted to approve its £950m purchase of Wickes yesterday. The deal moves Travis from its traditional focus on sales to the tradesman, into the bigger and faster growing DIY market. Will the acquisition prove a piece of successful craftsmanship or a bodged job?

The shareholders of Travis Perkins, the builders' merchant, voted to approve its £950m purchase of Wickes yesterday. The deal moves Travis from its traditional focus on sales to the tradesman, into the bigger and faster growing DIY market. Will the acquisition prove a piece of successful craftsmanship or a bodged job?

Buying Wickes is a decent next step for a company that was close to meeting its target of winning a 20 per cent share of the builders' merchant market and on an operational level, you wouldn't bet against it being a success. Travis has an awesome reputation for integrating its acquisitions, doubling earnings per share in the last five years by snapping up smaller players and squeezing the benefits that come from being able to buy supplies such as timber, bricks, tools and everything else in bulk. It has promised £35m in annual savings from the Wickes deal, mostly in purchasing.

Yet the deal has increased the risk profile of Travis shares. The company has previously fought shy of the DIY enthusiast, who takes up more time and spends less. Different management skills are required. And the deal comes just at the moment that Frank McKay, the chief executive for five years, heads into retirement. Geoff Cooper, his replacement, was respected as a director of Alliance UniChem but has no form in this industry.

Then there are the risks attached to the DIY market Travis is entering. The proliferation of Changing Rooms-style programmes on TV tempts one to believe this market will grow forever, but it is highly correlated to the housing market. If stagnant house prices mean fewer people moving home, then DIY retailers could struggle. As a relatively small player, Wickes will suffer if its rivals launch a price war to compensate.

And finally there is the question of the share price, which has sky-rocketed since the Wickes deal was unveiled. It can't all be justified by the extra earnings that Wickes will bring in, and the stock has now passed all but one analyst's target price. This looks a good point for shareholders to lock in profits.

Avoid Carter & Carter for a little while longer

Take your car for its service back to your local Audi, Volvo, Citroen or Peugeot dealership, and the mechanic who does the work may well be an employee of Carter & Carter, the car industry training and sales support company that began trading on AIM yesterday.

C&C is paid by the Government and car manufacturers to train car technicians through 42-month apprenticeships. They are popular courses. Some 17,000 applied for its 2,200 places last year. The long-term nature of the programmes give the company a reliable income stream and there is room for more manufacturer-branded training schemes.

C&C also supplies salesmen to car manufacturers who can sell spare parts and accident repair services. These kind of after-sales services are becoming increasingly important in a rather flat new car market.

The company is promising bolt-on acquisitions and an aggressive dividend from its high cash generation. But Philip Carter, founder of the business, sold £7m in the flotation, which never inspires confidence. At 295p, up from the float price of 235p, they appear to be on a forward earnings multiple of around 16 times, which looks expensive for now. Wait for a few more miles on the clock before taking a ride.

Tune in to Autonomy's new software for TV

We are getting close to an age in which viewers will be able to create their own TV channel. The advent of broadband means telecoms and cable companies can offer programmes and clips on demand, but much work is still to be done in the behind-the-scenes technology. How will the viewers' request for, say, all the latest Michael Jackson news clips, be sorted? Autonomy, the software company, has one answer, unveiling a new version of its complex search engine software yesterday which, thanks to speech recognition and other skills, can recognise and categorise programmes and clips. It is already working with some cable firms and third generation mobile operators, and sales could start to come through from next year.

The company's search software is used across government agencies and multi- national companies to access information across e-mails, computer desktops and documents. Last year, sales were $64.8m, up from $54.9m in 2003. Software spending has snapped back after the post-Millennium downturn. Autonomy was first in and first out of that downturn, since it simply sells licences to its customers - there are no ongoing service revenues to cushion the blow when times are hard. Now, though, those additional sales are feeding through immediately into profits, and pre-tax profit was up 12 per cent to $8.6m.

Even before the TV software kicks in, prospects for this year are strong. Corporate IT spending continues to grow, existing blue-chip customers are likely to order additional licences as Autonomy software proves its use, and product upgrades are being launched. The shares are worth holding.

PROMOTED VIDEO
Arts and Entertainment
Stik on the crane as he completed the mural
art
News
Happy in his hat: Pharrell Williams
people
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
News
i100(More than you think)
Arts and Entertainment
John Hurt will voice Prince Bolkonsky in Radio 4's War and Peace
radioRadio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
News
ebooksNow available in paperback
News
i100
News
people
News
Tony Blair and David Cameron side by side in 2006
people
News
news

Lincoln MP Karl McCartney 'denied all knowledge' of the Twitter activity

Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
filmDirector said film would 'never have been financed' with ethnic minority actors in key roles
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Argyll Scott International: 2x Service Desk Analyst

£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

Recruitment Genius: Senior Execution Trader

£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

Citifocus Ltd: ACA - Financial Reporting

£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?