DEFENCE may be out of favour, but Vosper Thorneycroft is a shining exception to the gloom in the sector. Recent full-year results showed steady progress. Pre-tax profits rose to pounds 27.6m (pounds 25m), with earnings per share up 10.4 per cent at 57.9p. This leaves the shares, at 818p, on a forward multiple of 12.9 times earnings. The company has a good order book, and the management's focus on cash generation (pounds 80m in the bank) will stand it in good stead for future self-funded acquisitions. Stockbroker Panmure Gordon estimates profits next year may climb to pounds 30.2m. If your ethics allow it, one of the best buys in the sector.
IT IS now almost two years since Charter, once a sprawling conglomerate, refocused its business and acquired Esab, the Swedish welding equipment group, as part of its strategy to become a global engineering concern. The City is expecting another big acquisition at any time. Judging by the relative success of Esab, the shares remain interesting.
AT LAST, St James Place Capital has proved its potential with a remarkable surge in its last figures, to pounds 46.5m in pre-tax profits, up from pounds 18.7m. Tipped previously in this column, the shares now warrant another look. One disappointment was the loss of the RITCP management contract. Strong growth in life assurance looks assured, and there is still long-term value left in the shares. But at 128p, the share price is now fully up with events.
INSPEC is a company at the commodity end of the chemicals industry. It made its biggest move when it bought BP's ethylene glycol plant in Antwerp last year, for pounds 80m. The company produces some 12,000 tonnes of an intermediate for the production of a high-quality rubber. It had around 90 per cent of the European market last year but a new plant coming on- stream from Exxon, with 10,000 tonnes of capacity, is a threat to its margins. The shares have performed spectacularly over the past few years, buoyed by the chemical cycle peaking. Take profits.
VARDON, the sea parks to bingo concern, has suffered under the weight of the lottery and the hot weather. But management is building steady, cash-generative businesses. The recent dip in its share price, now at 129p, and down from 145p a year ago, represents a good buying opportunity.
FLOATED last month at 105p, Epic Multimedia is now 95p. The slight decline may be justified at concerns that the sector - with much based on hype rather than real achievement - has become overheated. But Epic offers the comfort of an established business, in the shape of its CD-Rom venture for corporate customers, which generated sales of pounds 2.97m in the nine months to February, although losses were pounds 1.79m. High risk, but the shares still offer value.
FINALLY, to a forthcoming flotation: Circle Communications. The company trades TV rights around the world and plans a placing to raise pounds 6m. Despite turning a profit of pounds 1.12m in the year to 31 December 1995, the company has yet to establish a track record. Beware, unless the shares are priced at a marked discount to compensate for the risk.