DFS appears out of the top drawer

CITY TALK

MUCH hoopla surrounded the decision by Graham Kirkham, chairman of furniture retailer DFS, to add pounds 60m to his personal fortune from the sale of a 17 per cent stake in the company, floated on the stock market two years ago. Less attention was focused on the merits of the business itself.

But NatWest Markets continues to believe the shares offer good value. In a note this week, it said: "Retailers like DFS are a rarity. It has an established proven successful concept (26 years of growth) and more than adequate finance to realise its potential (90 to 100 stores) and sustain at least 15 per cent per annum compound growth simply by adding five or six stores each year." On a yield of 3.1 per cent at 343p, there is little downside. Buy.

GIVEN the number of companies trying to jump on the multi-media bandwagon, investors should show caution. Omni-Media is one arriviste eager to cash in on the coming boom, but has little so far to offer investors except hope.

Like similar fledgling businesses, it has recently listed its shares on the Alternative Investment Market. This week, it produced interim figures to the end of June 1995. Losses fell to pounds 279,137 from pounds 412,354 in the previous half year to 31 December 1994; sales climbed to pounds 199,962 from pounds 124,594.

But don't write it off just because of the losses. It has two attractions - pop and children's video CDs - and proprietary software to create such products. In both cases, revenues depend on volume sales, and a massive increase is in prospect. There is a case to be made for pre-tax profits hitting pounds 1m in 1996.

That is some haul, but joint managing director Tim Rosen is confident that with a raft of new products now ready to launch, the target can be achieved. If so that leaves the shares, at 65p, on an undemanding forward multiple of around 11 times earnings. Attractive, for a gamble of this order.

WHETHER hi-tech or biotech, hope springs eternal for start-up companies. ML Laboratories is still at this stage despite a share quotation since 1987 and, more recently, inclusion in the FT-SE 250 index, on a market capitalisation of pounds 430m.

Despite these achievements, the company is still scrabbling for sales and profits. Of course, if investors thought this were to continue, the shares would be nowhere near the 312p they closed at on Friday.

The latest excitement has been the possible application of its glucose polymer compounds - originally developed for kidney dialysis - as an Aids treatment. More imminent is the prospect of an announcement of a tie-up with a large drugs concern to license a new-generation asthma inhaler the company is developing. Even so, the shares remain expensive, and should not be chased.

NEW management often heralds a turnaround. That may be so at furniture- to-fabrics concern Cornwell Parker (85p), where the arrival of James Moore as chief executive has already lifted the shares.

After an impressive stint at Glen Dimplex, where he oversaw domestic appliance businesses Morphy Richards and Belling, he could be the right choice to implement the changes needed for the business to prosper.

However, Ruth Keattch, at merchant bank Granville Davies, says the shares warrant a cautious stance, with stock levels still an issue in the fabrics division. Wait for proof of Mr Moore's impact before buying again, she recommends.

SMITHS Industries announces full-year figures on Wednesday. City forecasts range from pounds 135m to pounds 139m, up from last year's pounds 117m.

Most of the advances are expected to come in medical technology, with earnings in the aerospace division flat. But with little expected in the way of unpleasant surprises, and the shares (559p) having performed well over the past few years, now is not the time to sell.

PREMIER Oil (27.25p) is favoured by stockbroker Charles Stanley as an oil company with a bright future. After the announcement in August that the Fife field in the North Sea was coming on stream, its shares leapt to 26.5p from 22.75p. That was followed by impressive interims, with pre- tax profits a shade over pounds 10m. Expect an even better second half. But the most significant news will be an announcement by the year end that it has signed a gas contract for the Yetagun field offshore Burma. Reserves are thought to amount to 2 trillion cubic feet. If the deal goes through, it will give Premier a stable source of long-term cash flow. Buy.

SHARES in Tring International are to be avoided, given their recent collapse to 52p, less than half the 108p price tag at which the company was floated in February. Although Tring concentrates on the low-price end of compact disc and audio cassette publishing, it has failed to establish much market presence.

Suggested Topics
PROMOTED VIDEO
Voices
Ukip leader Nigel Farage arrives at the Rochester by-election count
voicesIs it any wonder that Thornberry, Miliband, and Cameron have no idea about ordinary everyday life?
Sport
sportComment: Win or lose Hamilton represents the best of Britain
Life and Style
tech
News
ebooksNow available in paperback
Sport
Arsene Wenger reacts during Arsenal's 2-1 defeat to Swansea
footballMan United and Arsenal meet on Saturday with both clubs this time languishing outside the top four
News
i100BBC political editor Nick Robinson had a lot of explaining to do
Life and Style
Nappies could have advice on them to encourage mothers and fathers to talk to their babies more often
newsTalking to babies can improve their language and vocabulary skills
Sport
Tony Bellew holds two inflatable plastic sheep at the weigh-in for his rematch with Nathan Cleverly
boxingGrudge match takes place on Saturday night
Arts and Entertainment
Mark Ronson at PS1
arts + ents
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

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

Immigration: Obama's final frontier

The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
Bill Cosby rape allegations explained: Why are these allegations coming out now? Why didn’t these women come forward earlier? And why has nobody taken legal action?

Bill Cosby rape allegations explained

Why are these allegations coming out now? Why has nobody taken legal action? And what happens next for the man once thought of as 'America's Dad'
Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain

You know that headache you’ve got?

Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain
Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

Scoot commute

Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
Paul Robeson: The story of how an American icon was driven to death to be told in film

The Paul Robeson story

How an American icon was driven to death to be told in film
10 best satellite navigation systems

Never get lost again: 10 best satellite navigation systems

Keep your vehicle going in the right direction with a clever device
Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

Paul Scholes column

England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Michael Dawson: I’ll thank Spurs after we win says defender as he prepares to return with Hull

Michael Dawson: I’ll thank Spurs after we win

Hull defender faces his struggling former club on Sunday ready to show what they are missing. But he says he will always be grateful to Tottenham
Frank Warren column: Dr Wu has big plans for the professionals yet he should stick to the amateur game

Frank Warren column

Dr Wu has big plans for the professionals yet he should stick to the amateur game
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines