Investment Column: Sales look good at Standard so stick with it

Lamprell; Capital Pubs
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Our view: Hold

Share price: 204.6p (+6.9p)

After the barnstorming figures from St James's Place Capital, along comes Standard Life with another sparkling set of numbers. Is there a trend developing? Possibly. The stock market has recovered since the financial crisis but interest rates remain low so it's not that surprising that people are seeking out the sort of equity-linked savings products offered by Standard.

It's also true that saving is back in fashion whereas borrowing is not, a trend which again should benefit a company like Standard.

This being an insurance company, making sense of its figures is not easy. There are, as ever, several measures you can use.

But the headline life and pensions sales for 2009 actually fell by 7 percent to £14.7bn. However, that was well above the average forecast of £13.8bn for the year. Asia was flat and Europe was very bleak – Ireland's problems are well known while in Germany consumers have been sticking with German companies when it comes to financial services. Well, we can hardly blame them.

Still, Canada performed well and the core UK business did particularly well, compared with forecasts. The company's star was brightest in institutional money management mandates, winning several in the fourth quarter.

The shares, trading at 70 per cent of Standard's in-force book of business, are inexpensive and the forecast 2009 full-year yield is an exceptional 6.1 per cent. That is attractive, although the growth prospects might not be as exciting as those, say, offered by a Prudential. We wouldn't yet be willing to go overboard on these figures – you could easily get several institutional mandates in a day followed by nothing for months. Still, we would make Standard Life a core hold and wouldn't put anyone off from buying more.

Lamprell

Our view: Buy

Share price: 192p (+1.4p)

Anyone who follows these things will know that after a pretty miserable start to 2009, the oil price has recovered to more than $70 a barrel. Of course, we are still some way from the July 2008 highs of $147, but the gradual improvement has been great news for companies like oil services outfit Lamprell.

Although it has branched out, the group is essentially an oil rig refurbishment outfit, and when things are going well for those exploiting the black stuff, Lamprell cashes in. Yesterday, the company announced a glut of new contract wins worth $51m. As the sector gathers momentum, we are sure there will be more, and judging by recent history that should push the share price up.

The analysts will no doubt try to blind clients with lots of clever valuation equations, but essentially Lamprell is a proxy for the oil price. The group hit its highs of 568p just as the oil price touched its peak in the middle of 2008, and then went into freefall as the oil price fell.

With the global economy picking up pace, albeit slowly, we think Lamprell's share price will continue to tick upwards, which is just as well since the dividend yield of just over 1 per cent is not terribly exciting.

If you reckon that oil is going up, buy Lamprell. If you think it is heading down, sell. We sit in the former camp and would therefore back the group, but don't expect to see gains like the 140 per cent that's been added to the stock in the last 12 months. Buy.

Capital Pubs

Our view: Buy

Share price: 88p (-3p)

Shops in London have shown those in the regions a clean pair of heels during much of the recession, and some of this magic seems to have rubbed off on the city's pubs. The imaginatively named Capital Pub Company has done its best over the last year to bolster this theory and yesterday raised its glass to another positive trading update.

Alongside unveiling the purchase of two more London pubs, the company said trading had been "robust" – underlying sales are up by more than 5 per cent – since the last update on 18 November. With 28 pubs, primarily freehold, the strong performance has been driven by giving pub managers the freedom to tailor their beers and food menu to the local clientèle.

Picking pubs in areas with strong footfall, such as London's Oxford Street, also helps. Investors may note that Capital Pub stopped paying dividends in the autumn of 2008, but management are considering a restoration. The Aim-listed company's shares – which trades on 11.7 times forecast 2010 earnings – looks fairly priced and the house broker has pencilled in a rise in adjusted pre-tax profits to £2.3m this financial year. While the pub sector is unlikely to set the stock market alight, Capital Pub is in a good niche and looks likely to be one of the industry's safer long-term bets. Buy.

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