Investment Column: Sunny outlook to keep AG Barr sparkling

AG Barr

Our view: Hold for now

Share price: 1,263p (-61p)

Looking through AG Barr's trading update yesterday you could be forgiven for thinking the recession is little more than a myth. The maker of Irn Bru and other soft drinks said that trading between February and the end of May had been strong, with total revenues up 22.5 per cent and like-for-like sales increasing by 7.9 per cent. Its chief executive, Roger White, says that, with the group's products costing less than £1, it is as immune from the recession as any other business.

Indeed, it is not economics and high finance that worries Mr White. Rather he frets much more about the weather, fearing that another summer like the last two (for those with short memories, the rain seemed ceaseless) would be more damaging than any prolonged downturn. Investors will be relieved, then, that the Met Office appears to be predicting a warm summer. What buyers will be hoping for most as a result is an improvement in the performance of the share price, which has grown only marginally in the last three months, despite equities investors generally having a super time with other stocks.

It is maybe because the shares are regarded as already being fairly valued that their growth has slowed. The group has been a top operational performer in the past year, but even the house broker, Investec, does not see the stock rising beyond 1,400p in the next year.

We like AG Barr, and while we see the group as defensive in nature, which we still think is the most important characteristic of any stock, there are clearly those that have greater potential for growth. For the true bears, and those looking to add some stability to an already racy looking portfolio, we would heartily recommend AG Barr. Otherwise, we reckon the shares are likely to pause around this level. Hold for now.

JD Sports Fashion

Our view: Buy

Share price: 470p (-1p)

JD Sports Fashion is not a sportswear chain. The company is keen that we are all aware of that, lest it is confused with the likes of JJB or Sports Direct, which suffered after selling fewer football shirts than expected following England's failure to qualify for last year's European championships.

We reckon investors have already worked out that JD is a fashion chain, and does not share the same problems, judging by the stock's 66 per cent increase in the last quarter.

Its finance director, Brian Small, says that one of the reasons for the growth is that the stock was severely undervalued before the surge three months ago. True, but investors beware: when asked if he thinks the shares are still cheap, or otherwise, Mr Small now says it is not for him to comment.

The group issued a heartening management statement yesterday, saying that underlying sales in the 17 weeks to the end of May were up 1.7 per cent, with sales at fashion fascia stores up a very creditable 4.6 per cent.

This no doubt encouraged the watchers at Seymour Pierce to reaffirm their "buy" rating, adding that despite the notable gains of the last few months, the "stock remains lowly rated at 6.4 times based on our 2009/10 forecast, falling to 5.7 times in the following year and putting it at significant discount both to Sports Direct and the general retail sector". Buy.

Latchways

Our view: Buy

Share price: 545p (+32.5p)

For investors, yesterday's full-year numbers from Latchways, the designer and maker of fall protection safety systems (harnesses to stop people falling off big buildings, to you and me), were something of a mixed bag.

Of course, there were deserved cheers for the 10 per cent increase in the dividend. We have to say that there is some logic in its finance director Rex Orton's argument that it is better to give some of the £4.8m of net cash on the balance sheet back to investors "rather than have it in the bank doing nothing". We are also encouraged by the company's plans to target defensive industries such as the power utilities.

However, despite being well flagged a month ago, we were a little disappointed by the 3 per cent fall in operating profit, which itself was enhanced by beneficial currency movements. Latchways has long said it is a defensive bet because many of its products and sales are regulation-driven, but Mr Orton concedes that sales in the UK and US have slowed since the onset of the downturn.

That said, Latchways does clearly have defensive qualities, which should be accentuated by targeting clients with more defensive characteristics. Even though analysts at the house broker, Brewin Dolphin, cut their target price for the shares yesterday, we think there is probably still some juice left in them. Buy.

Suggested Topics
PROMOTED VIDEO
Arts and Entertainment
American singer, acclaimed actor of stage and screen, political activist and civil rights campaigner Paul Robeson (1898 - 1976), rehearses in relaxed mood at the piano.
filmSinger, actor, activist, athlete: Paul Robeson was a cultural giant. But prejudice and intolerance drove him to a miserable death. Now his story is to be told in film...
News
i100
Arts and Entertainment
Babysitter Katie and Paul have terse words in the park
tvReview: The strength of the writing keeps viewers glued to their seats even when they are confronted with the hard-hitting scenes
Life and Style
Make-up artists prepare contestants for last year’s Miss World, held in Budapest
fashion
Sport
England’s opening goalscorer Alex Oxlade-Chamberlain battles with Scotland’s Charlie Mulgrew
FootballEngland must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Life and Style
life
News
ebooksNow available in paperback
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

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Carlton Senior Appointments: Director, Private Bank - San Francisco, CA

$175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...

Carlton Senior Appointments: San Diego, CA – Tier 1 House - Senior MD FA

Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...

Day In a Page

US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

Immigration: Obama's final frontier

The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

Scoot commute

Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
Paul Robeson: The story of how an American icon was driven to death to be told in film

The Paul Robeson story

How an American icon was driven to death to be told in film
10 best satellite navigation systems

Never get lost again: 10 best satellite navigation systems

Keep your vehicle going in the right direction with a clever device
Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

Paul Scholes column

England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines
Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?

What are Jaden and Willow on about?

Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?
Fridge gate: How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces

Cold war

How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces
Stocking fillers: 10 best loo books

Stocking fillers: 10 best loo books

From dogs in cars to online etiquette, while away a few minutes in peace with one of these humorous, original and occasionally educational tomes
Malky Mackay appointed Wigan manager: Three texts keep Scot’s rehabilitation on a knife-edge

Three texts keep Mackay’s rehabilitation on a knife-edge

New Wigan manager said all the right things - but until the FA’s verdict is delivered he is still on probation, says Ian Herbert