The Investment Column: Cable & Wireless gives reassurancein troubled times

Trikona Trinity Capital; Statpro

Our view: Hold

Share price: 151p (-2.7p)

Finding a company that is in good shape amid the rest of the market malaise is becoming a tough task. Savvy investors know that retailers and financials are having a tough time, while many miners and oil groups are already trading at high multiples. However, if you look hard, it is still possible to find companies performing well. The telecoms group Cable & Wireless yesterday issued a solid management statement saying that it "is trading in line with expectations and is on track to achieve its guidance for group Ebitda of between £702m and £725m".

Cable & Wireless has changed a lot in recent years with the move away from its UK operations into two distinct businesses: international, which is the major telecommunications provider in places like Panama, and its Europe, Asia and US division, which provides big companies with telecoms services. The group is also waiting to see if its 180p a share offer for the communications group Thus will be successful.

Despite the good trading update, some analysts reckon that Cable &Wireless would be a poor investment choice. Those at Nomura argue that, while a successful bid for Thus would help, the group generates little cash. "We have not liked the stock for some time," they say. Furthermore, they argue that new investors would be paying over the odds if they bought Cable & Wireless stock, and that it would be better picking someone else. The group trades at 16 times earnings, while the rest of the European telecoms sector comes in at 12.5 times. Given the fact that companies such as Vodafone generate much more cash, investors should be wary of Cable & Wireless, they add. Merrill Lynch disagrees, saying that the statement, while lacking details, was reassuring. Hold.

Trikona Trinity Capital

Our view: Buy

Share price: 77.25p (+2.75p)

If there is one golden rule in today's market it must be this; do not buy property. When talking about builders and developers in Europe, that is certainly true. However, to every rule there is an exception, and in this case it is Trikona Trinity, which invests in Indian real estate.

India is booming, and real-estate prices are going through the roof. Trikona Trinity's full-year numbers, published yesterday, showed a 22 per cent increase in net asset value. Pre-tax profits nearly doubled from £34m to £63.7m.

Investors should be wary that as an Aim-listed stock, Trikona is vulnerable to changes in market sentiment, but on a fundamental basis, the company is a nailed on buy. In fact, the shares have come off by about 30 per cent in the last three months, so they are also probably pretty cheap.

Most analysts agree, with those at Numis arguing that while stocks in Trikona's peer group have depreciated by 18 per cent in the last month, Trikona has fallen 22 per cent, suggesting that even before you start talking about the company's healthier markets, the shares are already attractive. Watchers at Fairfax reckon the stock trades at a 48 per cent discount.

There are risks. The firm is not immune from the credit crunch and often Asian markets suffer the worst of any crisis sometime after the US and Europe. Moreover, during a downturn, investors tend to shy away from smaller groups, opting for the safer havens of organisations with bigger balance sheets.

If investors are convinced by the long-term growth story in India, which they should be, then Trikona, which largely concentrates on lengthy infrastructure projects, should offer a very good opportunity.

Statpro

Our view: Hold

Share price: 78p(unchanged)

"Dreadfully undervalued," is how Statpro's chief executive, Justin Wheatley, describes his company's share price. He says that Statpro, which provides software to fund managers, has suffered as "investors have lumped everything into one bucket and thrown it out".

He is the chief executive and would say that, especially as the group's stock has fallen steadily over the last year, which cannot have pleased his shareholders. However, he does have a point. Most software businesses sell their products by issuing a licence allowing a customer to use it and then pay for servicing and maintenance. Statpro leases its software each year, meaning that, while initial sales tend to be lower, only 5 per cent of customers bother going to the hassle of cancelling their contract, usually due to mergers.

The group issued a half-year trading statement yesterday, saying that it was hitting expectations.

The analysts tend to agree with Mr Wheatley that the group is underrated. "One to watch," say those at Panmure Gordon, who like the "recurring nature of the revenue [and] the cheap valuation," which in the current year is nine times earnings.

Investors should be wary that the stock will fall before it increases, something even Mr Wheatley concedes, and for that reason the company cannot be a buy. However, investors should keep a keen eye on Statpro. Hold for now.