It's being so boring that makes Rexam a buy

Countrywide no home banker; Eidos fun and games are priced in

Rexam is the biggest manufacturer of aluminium drinks cans in the world. It is not an exciting company. Results statements should send its shareholders to sleep, and then let them sleep soundly. And yet, Rexam shares have lost almost a quarter of their value this year and defied better-than-expected results to fall even further yesterday.

Its operations have been plodding along pretty nicely, and 2002 figures reflected the benefits of some modest price increases to its customers – often global leaders such as Coca-Cola and Unilever – and the latest trimming of its own internal costs. No sign of anything that might justify the de-rating the company's shares have suffered. The company promised again to hike its dividend by 5 per cent a year, and at the current share price yields 5 per cent.

There were some niggles yesterday. Some analysts had to shave their forecasts for 2003, without there being any real sense of why company guidance was slightly weaker. A new recycling system in Germany seems to have disrupted sales, and the plastic packaging business – which produces perfume bottles, mainly – has been hit by falling consumer confidence and weak airport duty-free sales. But these really are niggles.

The one issue of substance that has weighed on the share price has been the pension fund. Investors have been nervous that, with 70,000 members, the company's pension scheme could become a big problem in the way it has at several of UK plc's other old manufacturers. Rexam went some way towards easing the fears yesterday. Pre-tax profits (before goodwill and losses on disposals) of £274m included a £37m pension credit that won't be recurring now the scheme has slipped £193m into deficit. But the company is simply resuming the £22m-a-year cash payments to the fund that it had previously been allowed to holiday from. In the context of Rexam's total cash flow, this is small.

The risks are minimal. Most customers agree to shoulder raw materials price rises, and dollar-euro currency fluctuations cancel each other out. On 10 times this year's earnings, the shares are a buy.

Countrywide no home banker

Last year was the best of times for Countrywide Assured, but yesterday the UK's largest quoted estate agent was being seen as the harbinger of the worst of times.

It is only fair to record that the company posted a 47 per cent rise in pre-tax profits in 2002. The group – which has a market share of more than 8 per cent – has substantial overheads in good and bad times, in the form of offices and sales and administrative staff across the country. So the burst of activity in the housing market – and the agent's cut of soaring house prices – went straight on to Countrywide's bottom line and bolstered profits to £82.8m from just £59.3m the year before.

But that gearing effect works in reverse, too, despite the company's assertion that it has already begun shedding jobs and cutting advertising budgets to make up for the one-third decline in house sales in the first two months of the new financial year. The company lists the threat of war, economic downturn, acts of terrorism, and even famine in Africa as reasons for the sudden fall in transactions. Maybe confidence will rebound with a successful resolution in Iraq, and yesterday's 14 per cent fall in the Countrywide share price will appear very silly indeed. More likely, people are convinced the house price boom is over, and won't be tempted back for some time.

All Countrywide's businesses will suffer to some extent: it does surveying and conveyancing and sells life insurance, too.

As the current consensus of analysts' forecasts stands, Countrywide shares sit on seven times earnings at 102.5p yesterday. That might look pretty cheap, but the risk is that forecasts have not been pulled back far enough yet. This is a highly operationally geared company and its shares are a sell.

Eidos fun and games are priced in

The computer games developer Eidos, famous for its Tomb Raider titles, is as well known for its profits warnings and for delaying the release of titles as it is for the voluptuous Lara Croft herself.

But two new games – Hitman 2 and Timesplitters 2 – have sold far more copies than anyone predicted and raised hopes that the company might actually beat forecasts for a change this year.

Yesterday's half-year figures show it has made good progress and the company is back in the black again. In the six months to 31 December, Eidos made a profit of £6.7m compared with a loss of £2.2m last time. The shares rose 5 per cent to 121.25p.

Eidos is erring on the side of caution, saying it will meet only "current" market expectations for the financial year ending in June – a profit of £12m to £15m on sales of about £170m, about 7 million games. But the latest Tomb Raider title – The Angel of Darkness – is due out, after a five-month delay, early in April. Should it sell well, the extra sales will go straight to the profit line.

Eidos shares already reflect this optimism, though, trading on something close to 20 times current earnings forecasts. The share price can only be justified if the upgrades come through, and long-suffering investors will be forgiven for waiting for the evidence. Avoid.