Investment: Market shares P&S optimism

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PORTSMOUTH AND Sunderland, the regional newspapers to convenience stores group, faces a familiar dilemma. How can a company which relies on advertising revenue prepare itself for a recession?

Announcing a 34 per cent increase in adjusted first-half pre-tax earnings yesterday Sir Stephen Waley-Cohen, the chairman, struck a positive note, stressing that "prospects for local publishing and retailing were excellent". The market, which pushed the shares up 40p to 975p yesterday, shared his optimism.

When it comes to resilience to a recession, Portsmouth and Sunderland is different to other newspaper publishers. Two- thirds of its pounds 100m of revenues in the period came from its 200-strong chain of convenience stores. And it plans to increase the chain by 40 stores a year.

On full-year profit estimates of about pounds 15.5m, Portsmouth and Sunderland shares trade on a forward earnings multiple of just over 10. It looks well-placed to reap the benefit of its move into retailing. A long-term buy.