Hold on if you are developing a sweet tooth for Tate & Lyle

Maiden's rising revenues signal a buy; New broom makes Oxford Glyco one to sweep up

As an example of the rising fortunes of old economy stocks, Tate & Lyle is hard to beat. A couple of years ago investors wouldn't touch this sugar and starch maker with a barge pole. It was bogged down with terrible problems in the United States, where its businesses were losing money hand over fist and had been hit by strikes.

But everything has turned out sweet in the end. Tate & Lyle shares have had a strong run this year and now stand on the brink of the FTSE 100 index. Indeed the company was first reserve at the quarterly review earlier this month and if the merger of Lattice and National Grid goes through, it could become a blue chip again for the first time since 1997.

It isn't just changing sentiment that has pulled the group out of the syrup. The company has sold off some 30 business in the last three years including one in Australia and two sugar businesses in the US, Domino and Western.

With this sticky mess of baggage gone, Tate & Lyle has been prospering and yesterday's pre-close trading statement, ahead of the half-year results in November, said the company's performance was better than internal forecasts. First half profits are now expected to be "materially above" the same half last year. Lower debt is also leading to lower interest charges.

At Amylum, the US starch business, capacity utilisation is strong for the production of fructose, which is used in the production of soft drinks. The group is also on track for £50m of cost savings over the next three years from the integration of the group's US and European starch interests, which were previously run separately.

The points of concern include rising corn costs at the Staley starch business in the US, meaning the company will need price rises to maintain margins. And the departure of Larry Pillard, chief executive, at the end of the year might cause some uncertainty until his successor is announced.

Analysts have upgraded full-year profit forecasts to £210m. This puts the shares – down 2p at 360p – on a forward p/e of 12. A safe haven in tough times, though they are no longer particularly cheap. Hold.

Maiden's rising revenues signal a buy

Much has been written on the business pages about the decline of ITV. Viewers are deserting to a wide array of niche channels and cash-strapped companies have put their reduced advertising budgets to work elsewhere. It is with some justification that Ron Zeghibe, the chief executive of Maiden Group, describes billboard advertising as the one truly mass audience marketing medium.

Maiden is the UK's largest independent billboard operator, and its results have held up remarkably well in the face of the economic slowdown, at least until the start of this year. Yesterday, a few of the chickens roosted and, because of record numbers in the first half of 2001, Maiden's interims looked pretty disappointing. Pre-tax profit of £2.2m last year had turned to a loss of £2.3m, and even on the pre-amortisation measure favoured in the City, profits had fallen by three-quarters. That was well below even friendly analysts' forecasts, and the house broker, Numis, slashed full-year profit expectations by more than 10 per cent. The shares fell 12.5p to 237.5p.

Being charitable, this seems a problem of communication with the City rather than anything too serious. The turn of the year looked like the bottom of the economic cycle for Maiden and things have sharply improved since then. Revenue in the second quarter was positive against the same period last year, and so far in the third quarter has been running up 9.3 per cent. Even with pressure on margins, that will feed through to a dramatic improvement in profits in the second half – with one rider: Christmas is the make or break time for those full-year numbers when advertisers blow their budgets ahead of the festive spending frenzy.

Maiden is still investing in its portfolio of sites and adding new hi-tech features to a number of railway station billboards, reflecting its confidence. The shares have gone nowhere in a year (that's significant outperformance against the market, of course) and may take a while longer to stir, but the upside potential is large. Long-term buy.

New broom makes Oxford Glyco one to sweep up

Can the new broom at Oxford GlycoSciences put some new vroom behind the share price? David Ebsworth has done just the right things in his first 90 days at the biotech company, and said just the right things yesterday, but he can't make the group's shares anything more than the wildest of gambles.

He has cut the company's cash burn and has brought in an experienced deal-doer as finance director to help spend the £153m cash pile on new cancer products or whole companies with specialisms in the disease. In a couple of years there should also be some contribution from Zavesca, the one drug OGS has actually proved works, and which gets a European launch soon. Its prospects in the US are less clear, after it was rejected by the drug regulators in the summer.

At the core of the group is the proteomics division, which does drug discovery work for big pharmaceuticals companies. The plan is to make that profitable next year, a cash engine to help power the cancer research work. But when and how the group as a whole will make a profit is anyone's guess. OGS's cash pile gives it the upper hand in the vital consolidation of the European biotech industry, but until it is spent wisely the shares will be of interest only to speculators. Short-term investors may want to have a flutter now, at 150p, as Mr Ebsworth takes his impressive show on the road.