Coal is digging deep to keep face

THEN there were three. The demise of Coal Investments has left three quoted miners in the British coal industry, all of whose prospects have been enhanced by the exit of one of the two majors. The remarkable success of the other big player, RJB Mining, has been well highlighted, and most of the good news is probably already on the price.

However, two other companies, NSM and Rackwood, should not be overlooked. NSM (40p), valued at pounds 18m by the Stock Market, has many positive qualities to its name. But a more interesting investment, and a purer play on the UK coal scene is its smaller colleague, Rackwood Minerals. An opencast miner, at 55p, the company is worth pounds 8m. Good 1994 figures were capped by excellent interim results. These were probably something of a one-off, but even so, the company is on-course to up output from current levels of 350,000 tonnes a year, to 475,000 tonnes by the end of this year. Management have set a target of one million tonnes, and judging by their track record in recent times, there is no real reason to question this aim. Buy.

BRITISH Steel's success has earned it a place in any management textbook, and the achievement has been reflected in its share price over the last few years.

However, the good times look as if they may be over. For a start, steel prices have been on the wane, with 3-5 per cent cuts in construction steel already announced. Curiously, the shares have responded in the opposite direction, with a sudden and unexpected surge in the last week, to 197.5p.

NatWest Securities now sees this as a chance to take profits. Even a 10 per cent fall in steel prices would see operating profits from carbon steel completely wiped out. The company remains a cyclical play, and is now approaching the end of its current cycle.

PROBLEMS continue at Babcock International (129p), the engineering-to- materials handling group. Despite sales of pounds 755m in 1995, pre-tax profits amounted to a miserly pounds 7.8m, and are set to head south this year, on other problems.

Redundancies in Germany have had be postponed in order to comply with local employment laws, while the process division failed to win the anticipated orders from Saudi Arabia. It now looks as if the company will fail to break even this year. Avoid.

WE highlighted Peptide Therapeutics ahead of its flotation in November, since when the shares, after initial flurries took them to a high of 250p, have slid back to 199p. Nevertheless, there are promising signs that the company's strategy can pay off. With pounds 26m in the kitty, it has four years to work towards developing its products.

Its strategy is to buy in compounds, mainly peptides, which are sequences of amino acids, and the building blocks of proteins. Two allergy vaccines are already in Phase II trials, while it has a promising compound, for rheumatoid arthritis, in its Phase I trials. It also has a potential meningitis B vaccine which is still at the research stage. Peptide will continue to burn up cash over the next three years or so, but nevertheless the shares are a buy at current levels.

THE City seems to have decided that results from Williams Holdings a fortnight ago are a sell, judging by the shares. From 342p at the start of March, they have been on the slide ever since, and now stand at 319p.

But brokers UBS and Kleinwort Benson both view this as a buying opportunity. The fire protection, security and building products group saw sales up 14.7 per cent to pounds 1,598.5m, with pre-tax profit up the same to pounds 228.3m.

Disappointingly, earnings per share could rise only 2.8 per cent to 22.3p. But gearing, at 18.7 per cent, is low, and the business continues to spin off cash. Dividend growth looks assured, and the shares trade at a mere 13.4 times Kleinwort's forecast earnings of pounds 250m for 1996. That leaves the shares on a gross yield of 5.5 per cent. Buy for the income, and future growth.

WATCH shares in Gowrings (88p), which is barely changed since September, after the most recent outbreak of mad cow media frenzy. The car dealer has been expanding rapidly into the fast-food market, with a growing number of Burger King franchises on its books. The latest concerns can't be good for business. Sell.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent