Stores guru Nick Bubb, at Dutch stockbroker Mees Pierson, has been working out the relative attractions to a bidder of two of the sector's big disappointments, WH Smith and Sears. WH Smith, he believes, wins hands down as the more attractive of the two.
Both groups own plum assets - Selfridges in the case of Sears, and Virgin, Our Price and Waterstones for the newsagent. Both also have problem areas - Do-It-All for W H Smith, British Shoe Corporation at Sears.
But WH Smith probably offers a bidder more in terms of brand strength, market share and complementary businesses.
Smith, says Mr Bubb, is a buy and Sears, at 99.5p, a sell. The latter is likely to see profits decline further to pounds 100m in 1995 to 1996, to leave the shares on an overdemanding p/e ratio of 20.
Recovery at W H Smith, however, could lift the shares, at 421p, in any case, while a radical review to be unveiled in May could provide another fillip.
GUINNESS reports preliminary figures for 1995 this week and the market expects a good performance, despite a renewed bout of exceptional items that will hold profits back somewhat.
As a result, forecasts Dermott Carr of Nikko Europe, pre-tax profits will fall to pounds 896m from pounds 915m in 1994. However, that will leave the shares on an attractive 4.1 per cent yield.
There is also a growing belief that the company, still spinning off cash, will buy back its shares, or attempt in some way to return cash to shareholders. The shares, on 4671/2p, trade at around 13 times 1996's estimated pre- tax profit of pounds 1bn. Buy for the long term.
WHEN we tipped Flomeric here last December at 205p, its shares had only just been floated on the Alternative Investment Market at 130p. They have not moved since.
Management concerns of a slowdown in profit growth at the software supplier for fluid flow and heat transfer control proved misplaced. A pre-tax profit of pounds 415,565 was well ahead of the pounds 400,000 forecast at the time of flotation.
Sales also continued their impressive growth, up 33 per cent to pounds 4.147m. The company is paying its first dividend, 2.6p, and the cash surplus grew slightly to pounds 664,238.
The directors remain confident they can maintain the gross margins of around 90 per cent, which are not uncommon to software firms, and see a rosy future. Buy.
CORTECS (269p), the biotech start-up, continues to make significant progress on the research and development front, as its interim figures last week demonstrated.
For those of us who are able to withstand the nervous tension of possessing high-risk shares, the outlook remains promising.
Research and development of pounds 2.5m was the same as the previous six months, but growing sales for its diagnostic product, Helisal, reduced the cash burn to pounds 1.6m from pounds 2.2m.
Chairman Glen Travers hopes to launch a "one-step" blood test as well as a saliva test for Helicobacter pylori - the bacteria which is associated with stomach ulcers. The company is also collaborating on an oral treatment for eradicating H pylori.
Its osteoporosis diagnostic Osteosal should be launched on the European market some time later this year.
The company also has a product on the books that could lead to an oral version of insulin for diabetics. The shares remain a buy.
WHAT IS up at Signet, the jewellery group, once the fiefdom of Gerald Ratner?
In the past week, the shares have risen sharply to 231/2p. Volumes, by normal standards, have been heavy.
A buyer could be just around the corner for the group's British businesses, H Samuel and Ernest Jones. An information memorandum recently sent out to interested parties may have prompted the recent gains. Some comfort to long-suffering shareholders, perhaps, but there is little incentive to invest at this time.
If a deal goes through, it will leave a peculiar beast: most of the business will be in the US, while the shares are listed over here - another problem that will have to be rectified in due course. The shares are best left alone. Avoid.