Investment Column: M&C Saatchi convinces with upbeat results

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The Independent Online

Our view: Buy

Share price: 144p (+5p)

M&C Saatchi prides itself on being a young, dynamic and disruptive force in the advertising industry and says it is one of the fastest growing agencies in the business.

It clearly has not given up on the advertising adage of offering bombastic statements that do not mean much with its talk of offering its clients three-box thinking and "brutal simplicity of thought". The group's campaigns have included work for the Department of Health with the getting kids active and brands have included Coca-Cola, Dixons and Sharp. Most recently it won a global contract from UK defence giant BAE Systems.

The full-year results were impressive with revenues rising a fifth from £103.4m in 2009 to £125.1m last year. There was good growth from its operations in the US and Asia, while Europe pleasantly surprised the analysts as it rose 18 per cent despite "challenging trading conditions".

The group also announced that it had expanded into Russia after announcing it was to form a 50:50 venture with domestic agency EMCG, This followed the opening of two offices in South Africa and one in Italy last year. The focus on higher- margin businesses such as sport and entertainment and mobile, also looks like it will prove lucrative. The company is in a strong financial position with cash double that of 2009 at £31m and group debt almost halved to £2.3m. At around 10 times forward earnings, the shares also look like a good bet.

Office2Office

Our view: Buy

Share price: 125p (+9p)

Office2Office certainly cheered investors with its full-year figures yesterday. The update on the first quarter was key to the market's response, revealing in line trading despite the pressures posed by the office products supplier's exposure to the public sector.

As analysts noted, the fact that the dividend was held was a show of confidence. Hopes were reinforced by a strong pipeline of opportunities, and by the comments that the private sector was showing resilience and now made up "almost two thirds of group revenue". Though the economic backdrop remains changeable, this, coupled with an undemanding valuation, gives us confidence in the stock.

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