There is an old stock market adage that says: "Buy on bad news". So you should fill your boots with Compass.
The caterer, which closed on Friday at 220.5p, has been hit by everything: a UN investigation into the contracts it has to feed peacekeepers; a fall in margins because the Ministry of Defence is paying less for troop rations in Iraq now the war is apparently "over"; and criticism by Jamie Oliver of the food served to schoolkids by a Compass subsidiary.
As a result of the UN problems, the Serious Fraud Office has been alerted and two senior executives have had to resign. Add to that the retirement of the caterer's founder and chairman, Sir Francis Mackay, and the imminent departure of its chief executive, Mike Bailey, and you can see why Compass is in a muddle.
But 2006 promises to be a better year. Early on, Compass will announce who is buying its Select Service Partners business, which owns the Moto motorway services. Investors may be pleasantly surprised by how much it goes for. Then a new chief executive will be appointed, giving the group some direction.
It will be a long haul to turn Compass around, but with shares close to a five-year low, the task should be financially rewarding.
Royal Bank of Scotland
Over the past five years, apart from half a dozen peaks and troughs, shares in Royal Bank of Scotland, which closed on Friday at 1,755p, have traded in the range of 1,500p to 1,750p. This breaks down into two and a half years of outperformance, and two and a half of underperformance. Why?
The answer is management. When he bought NatWest in 1999, RBS's chief executive, Sir Fred Goodwin, was seen as one of the visionaries of the banking sector. But after a few less inspiring deals, and some run-ins with the City, he is now regarded as distant and arrogant.
This bad feeling has left RBS as the worst-rated of the major banks, but that will surely change. For a start, its financial performance has been consistently good. It will soon get an infusion of fresh blood, with a new finance director about to join and a new chairman taking over. And finally, there is the widely discussed prospect of Sir Fred leaving the group.
It is strange to suggest buying shares in the hope of the boss quitting, but that could be the best reason for buying RBS.
Nothing tempts investors quite like a break-up play. Rumours of a break-up of Whitbread - which owns Premier Travel Inn, Costa Coffee and the Beefeater restaurants - have been circulating for years, despite the leisure group's regular denials. With its performance beginning to falter in recent months, few believe its chief executive, Alan Parker, can drive as much value out of the group as a private equity-led break-up could.
The shares are not cheap; the City has already been buying on the hopes of a deal, and the stock closed on Friday at 949p. But Whitbread has some great brand names and there is always a chance of an auction as rivals vie for control. Analysts believe it could go for as much as 1,250p a share.
Romag sounds neither exciting nor innovative. A buildings materials group, it makes glass and plastic products and has a market value of £42m after finishing last year at 99.5p. But delve deeper, and you've got an anti-terrorism/renewable energy play with huge growth prospects.
Romag makes reinforced glass that can be used in armoured cars and for buildings. But its real growth prospects - particularly for the coming year - lie in the solar-powered "PowerGlaz" tiles it manufactures in a joint venture with BP.
The Government has so far neglected so-called mass market renewables - solar panels, wind turbines and other forms of clean power generation for domestic use. But in the spring, it will publish a White Paper promoting such products as PowerGlaz tiles, used in the construction of the Eden Project in Cornwall.
Analysts from broker Numis estimate that the global market for photovoltaic products (generating solar power) will grow by at least 30 per cent a year until 2010.
Taylor Nelson Sofres
The growth in advertising online and via direct mail and marketing is good news for Taylor Nelson Sofres (TNS), the world's second-largest market information company.
TNS collects data on such subjects as household spending patterns for consumer goods companies, pharmaceutical firms, car makers, technology groups and media businesses. It has been hit by the consumer slowdown in the UK and US, but new demand for market research, particularly from China, should help offset any prolonged downturn here.
Shares in TNS, which closed on Friday at 224.75p, underperformed the market last year, in common with the rest of the sector. But as those media companies dependent on traditional forms of advertising struggle, and demand for consumer information increases, its fortunes should be reversed.
After his exceptional performance with Hill & Smith last year (see facing page), Albie Nissé was again asked to choose a stock. Having just turned 18 months, the younger son of The Independent on Sunday's business editor has given up his technique of ramming the Financial Times' prices page into his mouth in favour of grabbing a pencil and putting a line through his favourite share.
This delivered Compel, a small IT group whose operations are primarily in "business solutions", "technology solutions" and "short-term rental solutions". Albie was unable to explain all these "solutions", but it seems that Compel manages complex IT projects for large clients as well as hiring out computers. The performance of Compel's share price - 89.5p at Friday's close - has not been all that inspiring but it recently returned to profit after being marginally loss making.Reuse content