The Investment Column: Kalamazoo

HELPING CAR dealers make a killing may not be everyone's idea of job satisfaction, but someone's got to do it. Shares in Kalamazoo, which sells computer services to car dealers, have more than doubled this year. The rise in the shares precedes the arrival of Malcolm Roberts, chief executive, at the mid point in his restructuring of the group. He says cost-cutting can deliver profits growth despite sales failing to budge.

Justifying Kalamazoo's sky high rating -- at 80.5p, over 80 times this year's forecast earnings - would stretch the rhetorical faculties of the most seasoned secondhand car dealer. The bull case is based on an upswing in sales of its software, which interfaces between car dealers and manufacturers. That's not due til late 2000.

On forecasts of pounds 1m pre-tax profits this year and earnings of 1.1p per share, rising to pounds 2.3m and 3.1p in 2001, the rating further out is less stretched. But the Internet has thrown into question the future of the forecourt and given the uncertainties investors should take profits.