Get some in at Punch Taverns

Hold on to copper-bottomed Antofagasta; Cut losses and jump out of Tadpole Technology

Time at the bar? The stock market seems to think it's chucking out time for the pubs sector, and share prices have been given a pummelling in the past couple of months. In the case of centrally-managed outlets located on crowded high streets, the roughing up is probably justified and it does seem that people are heading to the boozer less often at the moment. But the market seems to have lost sight that this sector can be a haven in troubled economic times, and certain stocks are looking attractive

Punch Taverns, Britain's second-biggest pubs operator with 4,479 outlets, is one such bargain. Unlike groups which manage their pubs direct from head office, Punch receives a set rental income from its publicans. This makes it less exposed to the effects of any drop in sales than some of its rivals, although beer sales still account for 63 per cent of turnover and the investment is not without its risks.

Giles Thorley, Punch's chief executive, used yesterday's shareholder meeting to trumpet the strength of locals versus high street bars, pointing to the 2 per cent rise in like-for-like sales in the 20 weeks to 4 January. This was slower growth than the 3 per cent rise it reported last year, but unlike many of its trendier, town centre rivals, Punch expects to hit its profit targets.

Those still sceptical of Punch – it only listed last May and is still just five years old – highlight its relatively high rents, which could see it come unstuck if its tenants start to struggle. Its estate (cobbled together from the cast-offs of groups such as Allied Domecq and Whitbread) isn't the smartest, either.

Since we tipped Punch at the flotation in May, the risks have increased, but the shares now trade on a forward price-earnings ratio of just six. Unless you think beer is going out of fashion, that's too cheap.

Hold on to copper-bottomed Antofagasta

Antofagasta is one of the UK's oldest quoted companies, with a continuous stock market listing since 1888 when it was founded as the Antofagasta (Chili) and Bolivia Railway Company. And, at a market value of £1.2bn, it is possibly one of the biggest UK companies you haven't heard of.

The Chilean railroad business is still there, bringing products from the mines in the interior out to the coast for export. But now Antofagasta is one of those doing the mining. It owns Los Pelambres, the sixth-biggest copper mine in the world. A production report yesterday suggests that Los Pelambres is turning out to be very rich indeed. The amount of copper in the ground was underestimated by initial geological surveys, and output in the fourth quarter of 2002 outstripped expectations.

In total, from Los Pelambres and two other projects, Antofagasta mined 137,100 tonnes of copper in the quarter, taking the annual total to 460,700, a 3.5 per cent increase on the previous year. John Meyer at Numis forecasts that net profit in 2002 will amount to $97m (£60m), up 56 per cent on the year before thanks to the third mine coming fully on stream. The railway business is also chugging along nicely, throwing off cash to pay a dividend worth 5 per cent of the share price.

Improved copper prices should feed through to earnings this year, going some way to justifying a price-earnings multiple of 19 times. But that copper price has been driven by speculation rather than a pick-up in global demand and may yet be reversed. On balance, and with a big family shareholder that may yet decide to sell out to one of the world's mining giants, the shares (down 1p to 602.5p) are a "hold" rather than a "buy".

Cut losses and jump out of Tadpole Technology

There is something beguiling about the name Tadpole Technology, suggesting it might be about to sprout legs and make a big leap in shareholder value. Its Endeavors software is an exciting way of enabling computers to share applications and to improve the security of instant messaging. But as yet it is at an early stage, with very few sales.

It is regrettable, but even the best technologies can fail to make big money if there is no powerful corporate machine to drive them towards commercialisation. Worse, Microsoft funds two of Tadpole's rivals.

There is a better established technology within Tadpole which, in an ideal world, would generate cash to support the work on Endeavors. Cartesia makes software used by utilities for relaying maps and other info to engineers in the field. Results released late on Tuesday are not detailed enough to judge how profitable this might be, but the group says Cartesia can break even by autumn. Tadpole's own broker has given up forecasting results.

What is sure is that Tadpole lost £11.1m in the year to 30 September. It reckons its £6.5m credit facility will be enough to fund the business for now, but this credit is no blessing. The debt is settled by the issue of shares, so every penny Tadpole spends on research dilutes the value of shareholders' equity. By summer, shareholders may be tapped for cash through a placing or rights issue.

Tadpole shares wriggled 11 per cent higher to 6.5p yesterday, but investors should cut their losses.

Start your day with The Independent, sign up for daily news emails
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

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?