The week in review

Car investors need a crash course

Inchcape

To understand the future prospects for Inchcape, one of the UK's largest car dealerships, you'll need a crash course in the Block Exemption. This is the exemption from normal European competition laws which was granted to protect the dinosaurs of car manufacturing. The European Union is introducing reforms which will reduce the carmakers' power from enormous to just quite large. It will be more difficult for them to terminate supply deals, and dealerships will be able to decide whether to offer a mix of sales and repairs.

To take advantage of this power shift, Inchcape and its rivals need to buy new dealerships that will give them greater financial muscle and more flexibility. Inchcape should be a clear medium-term winner. Buy.

BPP

Suddenly everyone wants to be a fraud-buster. BPP's tax and accountancy courses now make up the largest chunk of the group's turnover and have been going great guns. Owner of the Linguarama language schools, BPP also has growing interests in legal training and enrolment at its London law school has been impressive. The company was confident enough to hike the interim dividend and the shares now yield over 5 per cent. Buy.

BOC Group

Asked whether he believes the US is heading for a double dip recession, BOC's chief executive Tony Isaac replies that he hasn't seen any upturn in demand since the first dip. So how has the industrial gases supplier been managing to inflate profits in recent months? Some 1,200 former employees know the answer to that one. The redundancy programme, which will eventually top 1,700 job losses, will save £120m a year.

Mr Isaac is proving adept at matching supply with demand and BOC has managed to keep prices of its products relatively stable. The shares deserve to ascend from here.

Millennium & Copthorne Hotels

With its worldwide portfolio of upmarket hotels focused on providing rooms for travelling businessmen, Millennium & Copthorne had the most to lose from the collapse in confidence that followed the attacks of 11 September.

One third of its profits come from New York and London. John Wilson, M&C's respected chief executive, is confident the second half of this year will be better – but with the possibility of the US heading into a double-dip recession, the foundations for a sustained recovery remain shaky. While M&C said it was keen to add to its assets in Asia, which include some of the most coveted properties of any hotel group, its longer-term game plan remains less clear. The shares look expensive compared with such rivals as Six Continents and Hilton and until the economic picture becomes clearer investors should consider booking a room elsewhere.

Ultra Electronics

The US is already spending heavily on upgrading its military capabilities and the UK Government has promised do the same over the next three years. Both countries are upgrading communications systems and other technologies to help co-ordinate operations, and that means strong orders for Ultra Electronics, one of the experts in this field. Longer term, the prospects are mixed, but the shares have fallen back to a level that represents good value.

Baltimore Technologies

Baltimore, the internet security group, has been one of the most captivating riches-to-rags stories of the past few years. It has not ended in tragedy: good progress is being made on cutting costs and its cash pile of £23.1m should see it through to break-even, now expected early next year. But it is still too early to write that Baltimore's story will end "happily ever after".

As economic hardships continue, its customers remain reluctant to splash out on software. On that basis alone, the shares are only for the brave.

GKN

GKN, a manufacturer of car and aeroplane components and joint owner of the Agusta Westland helicopters business, is planning for tougher conditions in the car industry than most forecasters predict. It is a prudent stance that sums up its strategy in the tricky years that have beset its markets. While the civil aircraft market is sure to be in the doldrums until 2004, the defence aircraft side is doing well and is getting chunks of work from most key military projects in the US and Europe. Long-term buy.

Rotork

The industrial taps company does not count among its customers companies whose investment spending ebbs and flows with the economic tide. Rotork supplies oil and gas explorers, water companies and the power sector. It is confident new product developments will keep sales buoyant and offset the US dollar's weakness. A chunky dividend should underpin the shares, but they are fully valued.

MyTravel

You might think the threat of another Gulf War, bedding down a new management team, and shifting a mountain of unsold holidays would keep the group's rookie chief executive Tim Byrne busy, but no, MyTravel has opted to take on the might of easyJet with its own budget airline. Analysts question whether the project is not one distraction too many for a company that still has much to prove to the market. Mr Byrne's future will hang on the strength of the "lates" market – deals booked at the last minute – and of the group's disastrous German unit. The shares may look cheap but it is unclear if they are through the worst of the turbulence.

Bellway

Housebuilders' shares have been spooked by the impression that an unsustainable house price bubble has built up, but there is evidence the market has cooled in recent weeks. It also looks as if the Bank of England won't put up rates in the near future. This is very good news for housebuilding stocks, which always get punished heavily for rising interest rates.

Bellway has exited the central London market and now caters to the pretty safe market for family homes, with an average selling price of £120,000. That should shield it from any bursting of the bubble in the capital. The shares look tempting.

The above is a selection of recommendations from this week's daily investment columns