Bank of America Merrill Lynch said its global industry model suggested that inventories were now modestly above market equilibrium levels. Historically, this has been a good signal to reduce exposure to the sector, as the longer this state of affairs persists, the greater the risk of a correction. Indeed, barring a sharp upturn in the world economy, the broker said its indicators "point to the potential for an inventory correction, thus rendering the [risk/reward balance] associated with the ownership ( Read more... )
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Share price: 635p (-7p)

At the height of the downturn, SSL International, maker of Durex condoms and Scholl footcare products, used to say that its strong performance was helped by couples not having enough money to go out, and got bored spending night after night in front of the TV.

Despite the nuclear winter thawing, SSL's impressive performance has continued unabated, with the group announcing yesterday that six-month sales to 30 September were up 20 per cent, helped by surges ( Read more... )
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Share price: 1002p (-25p)

Compared to the announcements we have become accustomed to, yesterday's third-quarter production numbers from Xstrata were a tepid affair.

Last week the group walked away from its nil premium bid for rival Anglo American after Anglo persuaded its shareholders that the approach would not have saved enough money. So where does that leave Xstrata's shareholders?

The production numbers were a mixed bag: on the one hand, overall output was up thanks ( Read more... )
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But while Mrs Thatcher may have beaten Arthur Scargill and his colleagues, she did not end coalmining in the UK. Energybuild, the Aim-listed group that mines in the Welsh valleys (just like the good old days) announced its full-year results on Friday, rather proving there is life left in the pits yet.

The company has turned a 132 per cent increase in operating profit, while production, often the important measurement of success for small-cap miners, was up an impressive ( Read more... )
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So it must be all the more frustrating when things that should be easy just heap on more woes. According to accountancy group UHY Hacker Young, small companies are struggling to achieve growth in part because of delays of between three and five months as they wait for, of all things, VAT numbers.

The bean counters point out that HM Revenue and Customs (HMRC) is supposed to complete VAT registrations in just two weeks. UHY say the delays are due to backlogs as HMRC carries out anti-fraud ( Read more... )
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M&S

Our view: Hold

Share price: 369.7p (+2p)

Marks & Spencer hit the headlines over the weekend when it emerged that the high street bellwether had quietly scaled back its product return policy from 90 to 35 days.

But investors will be more concerned by the second-quarter figures M&S posts tomorrow. There will also be plenty of scrutiny about comments made by the retailer on any progress in its search to find a new boss to succeed Sir ( Read more... )
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Bank of America-Merrill Lynch, forecasts a 2 per cent rise in sales at the retailer, with UK sales up 1 per cent. It also expects to hear of market share gains in clothing, as the improved product offer and what Merrill terms a "well-targeted marketing spend" begin to pay off. "We think M&S's Portfolio brand has performed very well, Per Una is now in better shape and we expect [the group] to benefit from a more balanced price architecture, and from a gradual improvement in older shoppers' consumer ( Read more... )
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Share price: 594p

JD Sports Fashion has been the goody two-shoes of the sportswear sector recently. While rival JJB nearly went bankrupt this year and Sports Direct became embroiled in a potentially damaging price-fixing inquiry this month, JD behaved itself again yesterday by posting better-than-expected pre-tax profits, up by 14.5 per cent to £14.2m in the half-year to 1 August.

The retailer ? which unlike its two rivals sells very little sports equipment ? attributed the ( Read more... )
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Share price: 55.85p (-1.1p)

The last of the big banks is the biggest basket case. At least Royal Bank of Scotland has not made any false attempt to prettify itself. It is in a mess and its chief executive, Stephen Hester, has made no bones about that fact. What are the prospects of him making the £10m or so he stands to pocket if he can turn the company around?And is it worth investors taking a punt on him pulling it off by buying in now?

In the company's favour (unlike that ( Read more... )
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The stock gained ground after analysts at Keefe, Bruyette & Woods weighed in, saying that Barclays offered the most balanced investment case of the UK-focused banks. Not only do revenues from Barclays Capital, the group's investment banking arm, continue to impress, but as credit write-downs subside investors are likely to see "a more meaningful effect at the bottom line".

This should cover the rising credit costs and margin pressure that is expected in the retail and commercial banking ( Read more... )
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The group, which runs the Holiday Inn and Crowne Plaza chains, released its second-quarter results yesterday, saying that revenue was down, revenue per available room (a key measure in the industry) was down and it had recorded a loss of $82m after last year's $145m profit.

To make matters worse, the chief executive Andrew Cosslett said it would take two years for the industry to make a full recovery. Looking at the morose prognosis for business-class tickets from the ( Read more... )
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ING expects the company's thoughts on the subject to be "far and away the most important catalyst" this morning. "Given that the school sales season is just starting, management should be able to give early indications," the broker said, advising investors to keep any concerns in perspective.

"US schools sales are undoubtedly a famine. But in our view expenditure will be deferred rather than lost forever," ING added.

Numis is also taking the long view, saying ( Read more... )
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Deutsche Bank expects evidence of "robust sales trends" owing to the continued inventory clearance, but warns that the potential for forecast upgrades is slim. "This clearance will act as a drag on gross margins in the first half and, combined with adverse foreign exchange moves in recent months, limits the near-term potential for forecast upgrades," the broker said. "In the short term the shares may therefore give up some of their recent gains."

Credit Suisse also weighed in ahead of the ( Read more... )
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UBS said while the market was discounting regulatory benefits and the likely upswing in revenues as a recovery takes root ? in other words, while the stock appeared fairly valued on the basis of the broadcaster's current business model ? investors stood to benefit from a possible "strategic upside" owing to the fact that, unlike its peers, ITV "has the opportunity to create significant value" through the adoption of a subscription model.

"This would allow ITV to tap into new, faster-growing ( Read more... )
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Dunelin

Our view: Hold for now

Share price: 235p (+24.75p)

Dunelm Group's share price performance over the last year is almost a mirror image of that of most retailers. The out-of-town homeware group has seen its stock gain 80 per cent in the last 12 months as a series of upbeat trading updates and results have made the group the belle of the retail sector.

The group issued its full-year trading update yesterday, saying that like-for-like ( Read more... )
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The broker, which moved its recommendation on a 12-month view to "neutral" from "buy", with a revised 115p target price, compared with 150p previously, said "deteriorating fundamentals and earnings momentum" could result in the telecoms group becoming a "classic value trap".

"Excluding last year's tax gain, we expect earnings to decline 11 per cent this year. We think the upcoming KPIs [key performance indicators] are likely to show deterioration across the board, with the European businesses ( Read more... )
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Share price: 427p (+0.25p)

It came as such a relief to most investors that the world was still intact six months ago that many, particularly in the retail sector, started spending with gay abandon.

Of course, the recession has claimed its fair share of retail victims, but for most that remain, there has been no shortage of interest from punters.

The luxury fashion group Burberry is no different, and has seen its stock soar by more than 100 per cent in the last half year. ( Read more... )
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Bank of America-Merrill Lynch said the incoming finance chief David Thomas is likely to undertake another assessment of the group's landbank carrying values towards the calendar year-end, which in turn is likely to precipitate a "further 'hit' to stated NAV [net asset values]".

"Although the risk of further extensive land provisions has eased in the second quarter, the fact that Barratt has been so far 'behind the curve' recognising lower land values suggests that it is the most vulnerable ( Read more... )
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Share price: 1205p (-113p)

Most companies and investors would have been delighted by Autonomy's second-quarter update yesterday, but there will have been some long faces among investors in the group, whose software allows companies to track phone calls, emails and messages, as the stock fell 8.6 per cent in trading.

The numbers were undoubtedly impressive: pre-tax profits were up a record 64 per cent on this time last year, earnings per share leapt 61 per cent, and revenues ( Read more... )
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The troubled German group is Thomas Cook's largest shareholder, with an interest of around 53 per cent. Citi, which played down the chances of Rewe moving to acquire the stake, said the 44 per cent equity holding was unlikely to be placed before Arcandor's three-month insolvency period expires in September, while a resolution regarding the remaining 9 per cent held via a convertible bond may take longer.

"In the event of a placing at a discount to market, we would recommend buying shares," ( Read more... )
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