Wescol shapes up as steel rises again

Structural steel was a booming market by the end of the Eighties as architects and builders caught on to its benefits for modern fast-track construction techniques. But recession in the Nineties killed many firms in the market, as well as denting British Steel's profits. There are now only two quoted companies to offer exposure to the market, which is once again on the up: Severfield-Reeve and Wescol. Shareholders in both have enjoyed record returns since 1994. Severfield-Reeve has risen five- fold from lows of 50p in 1994 to stand at 251p. Wescol, by contrast, has enjoyed only a two-fold rise to 35p. Local talk, however, suggests the firm could be running three shifts at its Halifax factory, where it cuts and shapes steel for use in buildings, and football stadiums, which has become something of a speciality. Severfield looks fully valued. For those still bullish on structural steel, Wescol is the better bet.

On Thursday, British Telecom (359p) reports first-quarter figures for 1996. NatWest Securities forecasts profits will slip 3 per cent to pounds 851m, a reflection of a tighter regulatory regime, more competition, and, most significantly, per-second billing brought in in July 1995. The shares are a dull hold.

Zeneca is poised for a new phase of growth as several new products launch or come closer to the market. Three new cancer drugs are set to hit the market while Seroquel, a new treatment for schizophrenia, also takes the company into a new area. Restructuring its agrochemicals and speciality chemicals business will offset the launch costs. By 1998, growth rates of 18 per cent are a realistic proposition. Casodex, a prostate cancer treatment, has already seen a spectacular launch in the US, while agrochemicals are also looking good. The shares, at pounds 13.96, and 18 times 1997 earnings, may look expensive. But management has yet to put a foot wrong. Buy.

Women aged 25 to 34 are in sad decline as fashion aficionados, or so research from Goldman Sachs would suggest. Their older sisters, in the 34 to 44 group, however, are set to more than take up the slack and set the pace for the next decade. Their clout will have a heavy influence on high-street shopping patterns. Store chains Goldman highlights as potential winners out of this changing demographic profile are BhS (part of Storehouse, 285p); Dorothy Perkins and Debenhams, owned by Burton Group (151.5p); and Next (529p). All have shown that they are capable of spotting changing demographics and exploiting them to the hilt.

Land Securities looks like a prisoner of its own good housekeeping. A relatively strong balance sheet means it is less geared to any potential rise in the capital values of its property portfolio. The shares (613p) have had a a run recently, but will now struggle to maintain these levels. Sell.

The good times must be all but over at Ennemix, the small aggregates business. From 19p in December, the shares now stand at 60p following a bid from French group Lafarge, which owns 49 per cent, while Redland boasts 41 per cent. Remarkably, RMC has revealed it has upped its stake to 4.4 per cent. Whatever its intentions, there must be little upside left for speculators - otherwise, the shares should be held through to the culmination of the bid.

Investors were pleased by the news from Rolls-Royce that it would pull out of steam power generation business with a charge against profits of pounds 248m. But while the shares were marked higher, some believe they remain overvalued. Although having moved ahead from an October low of 150p, it seems that on their currrent price they are expecting the impossible. Analyst Peter Caldwell, of Nikko Europe, says profits would have to be up to 20 per cent higher than the range forecast for 1997 of between pounds 260m and pounds 280m. A boost in orders last year helped propel the shares, but the orders have since returned to normal levels. At 227p, the shares are overvalued.