Investment Column: Ignore Wetherspoon's weather worries

Character Group; Oxford Biomedica

Our view: Hold

Share price: 463p (-0.7p)

Stories about pub closures seem to crop up every few weeks. JD Wetherspoon is an exception, continuing to open new outlets. That's a refreshing change, although not as refreshing as a cool pint of lager at one of its outlets on a warm day. Unfortunately for the company the weather has been cold, really cold, and as a result, people have stayed at home, relying on the supermarkets for their tipples even more than usual.

Which is a shame, because prior to the cold snap, Wetherspoon's was doing rather well, with sales on a rising trend. Just look at the numbers. For the first 10 weeks of the second quarter (to 3 January 2010), sales excluding those from new openings increased by 1.0 per cent, compared to 0.3 per cent growth in the first quarter (to 25 October 2009). Total sales for the same period increased by 5.3 per cent, compared to 4.5 per cent in the first quarter

However, for the quarter's full 12 weeks, sales decreased by 0.3 per cent excluding new openings. Total sales increased by 3.7 per cent.

But that should not detract from the overall investment case, which remains as strong as any in a sector which is struggling. The company's debt mountain of £435m remains a concern but talks over re-financing are "progressing well". It needs to be reduced (so no dividend) because the terms are likely to be tighter this time around thanks to the credit crunch. All the same, if you strip out the weather, the company is presenting an encouraging picture of its operations.

We've said before that Wetherspoon is the quality play in the sector and the shares deserve a premium. That said, at 12.8 times forecast 2010 full year earnings, they are hardly cheap. Last time we looked at the company (in May) we said hold at 447.25p and they've risen slightly since then. The shares are too pricey to recommend buying more, but the company is doing well, so stick with it. Hold.

Character Group

Our view: Buy

Share price: 78p (+3.5p)

According to the much-loved theme tune, Postman Pat thinks he's a very lucky man. Shareholders in Character Group, which owns the rights to make toys of the Greendale postie and his sidekick Jess, may not feel quite so felicitous.

Character designs, develops and distributes toys, games and gifts to 30 countries around the world. Also on its roster are Fireman Sam, Scooby Doo and, um, the Terminator. In its recent history the AIM-listed stock has suffered a few bumps, falling from above 200p in October 2007 to as low as 23p early last year as the collapse of Woolworths shook the business.

The group put out a positive update yesterday, shaking off an 8.5 per cent fall in the toy market in 2009, as it posted a 1.2 per cent boost in the first four months of its financial year. After giving its products a facelift, management expects a significant turnaround in pre-tax profits in the first half of 2010.

The optimism drove analysts at Charles Stanley to upgrade full year estimates from £2m to £3.5m yesterday. With a price to earnings ratio of 6.6 times 2012 earnings per share, this looks awfully cheap, although much depends on the success of new products such as the latest Doctor Who range. Certainly, the Terminator full head mask and voice changer is a winner (and great fun for terrifying friends and family), and this year the shares – to paraphrase the original Arnold Schwarzenegger movie – might well be back. Buy.

Oxford Biomedica

Our view: Buy

Share price: 12p (+0.25p)

There was a time, not too long ago, when analysts used to say that Oxford Biomedica was like an onion: peel away the various layers, and ultimately you're left with little.

But things are changing for the AIM-listed gene therapy group. Yesterday it announced that UshStat, a treatment for Usher Syndrome, a rare but nonetheless nasty genetic disorder that leads to deafness and blindness, has been granted so-called orphan status by the European regulators. The move grants the company 10 years of marketing exclusivity, and reduces regulatory fees in the future.

Small biotech companies depend on a strong flow of news to get investors excited, especially as they are likely to be asked for more money in the future to fund research, while the notion of a dividend is laughable.

UshStat is the second of its treatments to be granted orphan status in the last six weeks after Stargen, a potential drug for treating Stargardt's disease, was similarly approved. The share price has responded in kind, putting on nearly 50 per cent in the last 12 months alone. Investors should not get carried away. Biotech is, and always will be, one of the most high risk sectors, but you could do worse than to back Oxford Biomedica. Buy.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'