Croda's an attractive tip for a pretty good new year

  • @greentoby

If you trust the opinions of analysts in the Square Mile, 2012 could be a pretty good year for Croda. They painted an optimistic picture yesterday of the future for the chemicals group – its customers include make-up giants L'Oréal and Estée Lauder – claiming a growing need to look good has left it sitting pretty.

Croda was chosen by Deutsche Bank's Tim Jones as his top UK stock in the sector for 2012, citing a number of reasons, including his belief that demand for consumer products using its chemicals will continue to grow.

The analyst said that with more men wanting to take care of their appearance while an ageing population attempts to keep looking young, there has been a trend for "increased grooming" that has "supported growth through the downturn".

The analyst, who kept his "buy" recommendation", also revived talk that Croda could become a bid target.

It is a familiar idea, with US company Dow Chemical one of the names frequently linked in takeover speculation.

Mr Jones said: "External interest is possible given [Croda's] strong market positions, consumer focus and relatively small size of the company."

However, he conceded that "valuation may prove an obstacle" and predicted that in the sector "management teams will remain cautious".

Despite the praise – which included his speculating that the company's strong balance sheet could see it returning more cash to punters – Croda eased up only 6p to 1,850p on the mid-tier index.

At the start of what was again described as a vital week for the eurozone, German leader Angela Merkel and and her French counterpart Nicolas Sarkozy's joint proposals for a new EU treaty were greeted with cautious optimism.

Yet while the FTSE 100 moved above the 5,600 level during trading for the first time since October, by the bell it was just 15.67 points stronger at 5,567.96, although this was still a five-week high.

The two state-backed blue-chip banks stormed ahead, with Lloyds grabbing the top spot after surging up 1.61p to 27p.

The sector was helped by Deutsche Bank's announcing that it remained "positive on the UK domestic banks long-term" and recommending punters buy into Lloyds as well as Royal Bank of Scotland (up 1.14p to 22.77p) and Barclays (up 1p to 191.65p).

Among the commodity stocks, Glencore International rose 14p to 424.95p after its boss Ivan Glasenberg claimed in an interview with the Swiss newspaper 20 Minuten that he would not get rid of any of his 15.8 per cent stake while working at the company.

Burberry was out of fashion with invesors, slipping 44p to 1,272p and propping up the foot of the top-tier index.

Unsurprisingly, it was gloomy news from China, one of the luxury brand's major growth markets, that did the damage after services sector data from the country showed further signs of a slowdown.

Good news may be rare in retail at the moment but as Peel Hunt pointed out, at least it's not snowing.

Twelve months ago, icy conditions forced shoppers to stay at home, whereas Christmas looks set to be milder this year.

The broker noted that online retailers, unable to offer their usual delivery guarantees, were particularly hit by last year's weather, citing Asos as one example.

Peel Hunt said that this year the AIM-listed clothing company's figures would impress in comparison.

Its analysts also upgraded its rating to "buy" in the wake of the group's share price losing more than 40 per cent since June. It rose 47p to 1,407p in response.

However, despite strong sales figures from sector bellwether John Lewis over the weekend, not every retailer was on the rise. Next declined 57p to 2,660p while Marks & Spencer was 1.1p lower at 329p amid fears over sales discounts already being offered on the high street.

There was yet more woe for recruiters after Michael Page warned its profits for the year would be towards the lower end of City forecasts. It retreated 4.8p to 87.65p as a result. And coming after SThree's admission last week that it has seen a slowdown in trading , traders were looking nervously at sector peer Hays, which eased back 0.55p to 70.65p.

Evolution's Nigel Pearson clearly fancies himself as a film critic, arguing that while 3D technology "cannot make a bad film good ... it can make a good film better". He went on to note that the increase this year in the number of 3D titles could only be good news for Cineworld, although the cinema company still failed to move from 204p.

Also on the small-cap index, its announcement that it had struck a €222 m (£191m) deal to sell its Norwegian business saw newspaper publisher Mecom climb 12p to 197p.

FTSE 100 Risers

l International Airlines Group 157.9p (up 4.4p, 2.87 per cent) British Airways owner climbs as its latest traffic figures show a 2.1 per cent increase in the number of passengers over November.

l Lonmin 1,076p (up 13p, 1.22 per cent) Platinum producer manages to strike deal with South Africa's National Union of Mineworkers to raise the pay of its employees by as much as 10 per cent.

FTSE 100 Fallers

l Centrica 293.1p (down 3.2p, 1.08 per cent) Owner of British Gas falls despite announcing it is looking for joint-investment opportunities in upstream oil and gas with Qatar Petroleum.

l British American Tobacco 2,933p (down 23.5p, 0.79 per cent) Cigarette manufacturer drops for the first time in six trading sessions, as punters decide to move away from defensive stocks.

FTSE 250 Risers

l Pace 67.9p (up 10.65p, 18.6 per cent) Set-top box maker helped by Numis upgrading its rating to "hold" in the wake of last week's news that major supplier Western Digital has restarted production in Thailand.

l SDL 663p (up 32.5p, 5.15 per cent) Translation software company still climbing after announcing on Friday it has managed to agree £68.4m takeover of small-cap marketing group Alterian.

FTSE 250 Fallers

l Bellway 732p (down 44.5p, 5.73 per cent) Housebuilder knocked back by Panmure Gordon's decision to downgrade its recommendation to "hold" from "buy", citing the recent strong rise in the group's share price.

l Berkeley 1,316p (down 44p, 3.24 per cent) Builder slips despite a number of brokers – including Credit Suisse and UBS – all raising their target prices on the company following Friday's interim results.