C&W shows value on its own right

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JAMES ROSS - not the boss of Cable & Wireless but the Hoare Govett telecoms analyst - says he doubts the tittle-tattle about BT bidding for C&W, pointing out cogently that it would first need the approval of the Chinese government and several others, quite apart from that of the competition authorities of the UK and the EU.

But Ross forecasts C&W's profit will jump from pounds 844m to pounds 1.29bn in the year to March, as loss-making associated companies swing into profit. At 437p, the shares are on a prospective price-earnings ratio of 16.8 and 2.8 per cent yield. Worth buying once the takeover froth has been blown off.

UNLIKE the disastrous Tadpole Technology, the Filtronic Comtek telecommunications group seems to be going from strength to strength.

The global mobile phone market is expected to double to 100 million subscribers in the next five years, creating a promising base for the group's gadgets and sub-systems, which are used in base stations.

Profits in the year to May 1993 were only pounds 200,000, but in the following year they jumped to pounds 1.1m and should have tripled to pounds 3.2m in the year ended last month. Trouble is, that would still leave the shares at 310p on 67 times earnings. The shares have not disappointed since last October's flotation, but they have run so far ahead that they could be vulnerable to squalls.

HOUSE BROKER Panmure Gordon has followed James Capel in backing shares in Sanderson Electronics, which has the dubious distinction of being the only company to sponsor two Premier League football teams - Southampton and Sheffield Wednesday.

Panmure reckons recent interim results put Sanderson on track to meet a broker's forecast of profits rising from pounds 4.2m to pounds 5.5m for the year to September. Sanderson is now a significant player in applications software for ICL, Hewlett Packard, IBM and others. The group has installed 4,000 systems, generating annual maintenance revenue of pounds 18m. At 97p the shares are on a prospective p/e ratio of 11 and yield of 4.8 per cent. Buy.

BUY Siebe, says Charles Stanley, the stockbrokers, rating it as an "attractive" international engineering firm with strong growth targets in all operations over the next few years. Stanley believes profits should jump from pounds 275m to pounds 320m in the year to March, and to pounds 380m next year. At 631p, that would put the shares on an earnings multiple of 12.6, good value for a pounds 2.7bn FT-SE 100 company.

THURSDAY'S deal by Frost Group to buy Burmah Castrol's UK petrol business has been well received and makes the shares worth buying in the next 10 days. That way new investors qualify for the Save petrol chain's one- for-three rights issue accompanying the deal, at 213p compared with the current price of 272p. By taking up the rights, the average price comes down to 257p. That takes the prospective p/e ratio down to 18 on existing forecasts. The real benefits will not show through until next year, when all the Burmah sites have been rebranded.

Trading begins on Tuesday in Kingsbury Group, the furniture chain that rose from the ashes of the old Maples and Waring & Gillow businesses. It has 41 Kingsbury Interiors stores, and it is encouraging see the directors and most of a high-class list of institutional investors holding on to their shares. Chairman is Dennis Cassidy (ex BhS, Boddingtons), and the managing director is Simon Bee (ex Sketchley).

The opening price of 100p is only 14.1 times 1994's earnings, leaving the shares on a generous discount to those of DFS, its nearest rival.