Investment Column: Aggreko has some powerful attractions


Aggreko

Our view: buy

Share price: 1,678p (+84p)

The earthquake and tsunami in Japan were so horrific it feels wrong even to recognise that there may be beneficiaries. But as life goes on, and the recovery swings into action, beneficiaries there will be.

One such is Aggreko. The temporary power provider's shares rallied yesterday as the market welcomed the news that the company is to supply power to Japan to make up for some of the shortfall from the nuclear plants crippled by the disaster.

Under the deal with the Tokyo Electric Power Company (Tepco) – which faces criticism over radiation leakage from the worst-hit nuclear facility at Fukushima Daiichi – Aggreko will install gas and diesel-fired power plants in the Tokyo Bay area to supply 200 megawatts of power.

"Within a few days of the disaster, Aggreko entered into discussions with Tepco to bring additional power to the grid," Rupert Soames, the Aggreko chief executive, said yesterday. "Aggreko is pleased it is able to be of assistance to the country at this very difficult time."

The group is already on a roll. Its shares have rocketed by more than a third over the past 12 months. And Aggreko's Japanese contract win comes hot on the heels of full-year financial results showing revenues up by 17 per cent and profits up a quarter – funding a 50 per cent dividend rise and an extra £150m return of capital.

The only slight drag is that 2010 saw a whopping £87m boost from power supply contracts for no less than three major sporting events, the World Cup, the Winter Olympics and the Asian Games, which will make the comparators tougher this year. But leaving that aside, Aggreko still expects similar trading profits throughout 2011. Moreover, the London Olympics power supply contract kicks in next year.

To be sure, there have been questions from analysts about the impact from the upheavals in the Middle East. But with so many growth opportunities, Aggreko still has plenty of potential headroom.



Cranswick

Our view: hold

Share price: 790p (-41p)

The last time we looked at Cranswick, the food producer had impressed us enough to merit a positive view. Yesterday, it issued an update on the final quarter of its financial year, reporting higher volumes, but slower revenue growth. The key talking point, in our view, was the cautious outlook statement, which sent the shares lower. Cranswick, which supplies major supermarkets, warned that, while it expected the performance in the year to March to be broadly in line with the board's hopes, the picture for the 12 months to next March suggested that the period may prove "more demanding than usual".

This should not be surprising as the UK consumer environment remains far from inspiring. Moreover, Cranswick trades on undemanding multiples of under 12 times forward earnings, according to Panmure Gordon.

The broker did, however, revise its view in light of the outlook. We are inclined to agree. This is a good company with an affordable stock, but we think investors should remain mindful of the wider economic picture.



YouGov

Our view: hold

Share price: 51.25p (+0.5p)

If you took a straw poll of YouGov's management, they would probably say they were looking to the future with some confidence, especially after yesterday's solid first-half results, showing a 27 per cent rise in revenues.

In particular, the group's plan to target the US looks to have been vindicated. With strong organic growth, and several acquisitions, it is now the company's largest region. Yesterday, YouGov also unveiled the takeover of Definitive Insights, which will bring market research strength on the US West Coast. In the UK, revenues rose 20 per cent in the first half, while Scandinavia was up 12 per cent. The company was also helped by a lower than expected tax charge.

The real problem area for YouGov has been Germany. It looks like it needs more time and, crucially, more money to resolve the issues. Despite the businesses remaining profitable, revenues fell 12 per cent. The company will hope the imminent announcement of a new chief executive will mark a turning point. That, and a pretty full valuation of 17 times forward earnings, means that we would hold back from buying just yet.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
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

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links