City Talk: Pilkington's glass jaw exposed

POOR old Pilkington. No sooner had the glass-maker reached a point in the cycle where it was sitting pretty, and the strenuous efforts of previous years to rebuild its fortunes looked to be paying off, than glass prices fell again. Its interim figures, a fortnight ago, showed the company in control of the situation, but struggling with a 12 per cent decline in European glass prices. On Thursday, it announced the abandonment of plans to float off a 49 per cent stake in its Australian subsidiary. Although the move scotches a scheme first announced in February 1994, it may yet work in its favour. Nevertheless, unless there is a bid, the medium-term outlook for the shares, at 148p, is unappealing. Avoid.

Since it was floated on AIM in July, at 134p a share, UNO, a Liverpool- based furniture chain aimed squarely at socio-economic groups C1/C2/D, has had a strong performance. The shares have levelled off at around 165p for the last few months, after briefly touching 178p. But given the track record of the management - and a heavyweight collection of non-executives - Henry Lewis, formerly joint managing director of Marks and Spencer, and Egon von Greyerz, one-time finance director of Dixons - the company should have the expertise to develop a convincing expansion story over the next few years. Pre-tax profits of pounds 2.3m are likely next year, followed by pounds 3.5m in 1998. That leaves the shares on 16 times 1997 earnings - a touch expensive, but justified on current prospects. Buy.

St Ives, one of the great success stories in printing, continues to work its magic. After hitting a low of 428p in September, the shares have come back to 470p. The company remains one of the best-invested, best- run companies in the sector. Magazine volumes, after a tricky 1995, the result probably of the very high cost of magazine grade paper, which hit publishing companies' advertising yield, should stabilise in 1997. It also has a small multimedia arm, which has reported decent growth. Alastair Irvine, a broker at Merrill Lynch, sees pre-tax profits of pounds 47.5m in 1997. Meanwhile, the shares trade at a mere 6 per cent premium to the market, with plenty of cash in the bank. Buy.

Time to lighten your holdings in Vickers (285p). The shares, which have performed admirably over the last few years, are now looking distinctly toppy. On pre-tax profits of pounds 75.5m in 1995, it looks as if the company can breach the pounds 80m mark this year and possibly rise as high as pounds 95m in 1997. However, there are several risks out there at present. A new Rolls- Royce four-door saloon is the first new model to be launched in 15 years. Meanwhile, the market for defence exports looks tougher, while much rests on the current Challenger 2 reliability trials now underway. Take profits.

RTZ (920p) has been caught in a cross-fire of conflicting messages. Any rise in sterling is always a bugbear for the business, with so many of its products denominated in dollars. Brokers UBS downgraded the stock on this basis, cutting its forecasts by 6 per cent for this year and next. However, the company has just announced it will spend pounds 245m expanding its Colombian coal business, with its partner CRA, to take advantage of an expected boom in European coal imports. On balance, the shares remain a strong hold.

Last week saw another little turnaround story, Blagden Industries (208.5p), continues on its recovery track. It bought Marlow Group, a chemical trading business, for pounds 5.1m, plus pounds 1m of debt. Blagden has logged up a convincing improvement under new management led by chief executive Dick Searle, who arrived last year. The latest deal will allow the group to virtually double its chemicals trading business. Meanwhile, steel drums, continue to generate cash, although Mr Searle has set his sights on further expansion in speciality chemicals. Hang on for further growth.