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It has taken a long time, but Clinton Cards, our 'Company Profile' back in November 2001, is finally receiving the attention it deserves.

Recommended at 165p, the shares have surged to 189.5p (a two-year high) on the back of a commendable set of results for the year to January.

Profits at the card retailer skipped ahead 11 per cent to £19.65 million on turnover of £289.25 million (£268.8 million).

At year-end, Clinton traded from 672 outlets, four fewer than 12 months earlier. This was because some stores were closed and others relocated in a bid to improve the quality of Clinton's trading outlets.

This year the group hopes to trade from 700 stores, and it has £33.7 million in its coffers to help fund this expansion.

Seymour Pierce analyst Rhys Williams expects £24.6 million pre-tax and -goodwill profit for 2003, which should deliver earnings of 24.3p. This puts the group on an undemanding prospective p/e ratio of 7.6. Hold.

Nifty IFTE

Another company laying the foundations for expansion during April was fire training equipment company IFTE. It was first recommended here in May 2001 at 91p.

Benefiting from a sharper focus on fire safety and training issues following 11 September, the firm has managed to raise £2.6 million from various institutions, at 115p, to boost its marketing efforts. Chairman David Williams claims IFTE has 'always [been] run on a shoestring' and welcomes the opportunity for more aggressive marketing now that it has 'a number of simulators around the world'.

IFTE is projected to make a profit of £900,000 in the year to April 2002 on sales of £21-£22 million. Next year profits are expected to improve to £31.8 million. On a forward p/e of 30.2 for 2002, the shares are no longer cheap, although this multiple falls to 14.4 for 2003. At 119p, they should be held.

Solitaire still alone

Residential property manager Solitaire has delivered decent gains since we suggested the company to investors, at 286.5p, back in November.

Until a week or so ago, the shares were trading as high as 360p. But full-year results knocked the price back more than 11 per cent to 25.5p. The figures actually showed that the company's underlying business is robust: operating profits last year increased 12 per cent to £1.7 million on turnover up £1 million to £5.1 million. However, a £233,000 exceptional charge, incurred after an aborted investment partnership, dragged pre-tax profits down to £1.2 million.

The charge was levied after Solitaire tried – and failed – to raise £33 million for a housing investment trust. Joint managing director Graham Shapiro says the company missed the minimum cash target 'by a tiny amount' and will 'try again'.

Solitaire had hoped to manage the properties the trust invested in, and expected to earn 10 per cent of the rental income on a portfolio worth £55 million.

In the meantime, Shapiro will concentrate on a business whose order books are at 'record levels', with annual recurring revenues running

at 70 per cent. Stay with the shares.

Havelock has luck

Readers who tucked away Havelock Europa shares in April 2001 at our preferred price of 28.5p will have made solid and substantial gains. They are now trading at 57.5p.

The group, which specialises in retail interiors, point-of-sale displays and science laboratories, reported pre-exceptional and -tax profits of £1.1 million for the year to December 2001. This was ahead of expectations. However, the post-exceptional result was a loss of £2.6 million due to a £3.8 million loss on the closure of the Retail Interiors manufacturing facility in Nottingham.

A divisional breakdown reveals excellent contributions from the point-of-sale display business, its Bahrain-based joint venture and September acquisition ESA McIntosh. All of this offset a torrid showing by its Retail Interiors arm. The operation has now been restructured in the hope that it will reach profitability on lower turnover.

David Taylor, of house broker Teather & Greenwood, has kept his forecast at £3.5 million pre-tax profit for the year, rising to £4 million next. This gives an EPS of 9.7p, then 10.4p.

While the shares are still trading at a mere 5.9 times prospective 2002 earnings, the group's gearing is at 116 per cent and last year's interest cover was just 2.2 times. Taylor admits this is not ideal, but believes it should be a healthier 3.8 times by the end of the year.

If this is achieved, the shares could go further. Hold.

Gooch & Housego disappoints

While most of last month's recommendations are looking healthy (particularly Auto Indemnity, ahead 14 per cent at 34.25p), the situation at optical engineering firm Gooch & Housego is quite the opposite. We recommended the shares at 157.5p in light of the firm's good sales and profits growth, its solid product development record and a reduction in gearing to easily manageable levels.

After detailed discussions with the company's brokers and management, we were fully aware that this year's figures would be lower than the £4.2 million profits achieved in 2001. We believed, as we stated, that it was worth buying into the company for an expected upturn in results by 2003.

The adverse impact from the weak IT sector and US economy was, in our opinion, already in the price. Unfortunately, the shares have fallen to around 122p following the group's recent profits warning.

In a curt statement, the company highlighted 'a significant fall off in demand for q-switches'. Although orders have been 'deferred rather than cancelled', it admitted it would be reporting profits 'significantly below those of the previous year'.

This statement was not only a surprise to Growth Company Investor, but also its broker ING Barings. An ING spokesman says the warning from management was 'a bolt from the blue'.

ING has since reduced the shares from a 'buy' to 'hold'. It now expects profits of just £2.2 million this year, and £4 million in 2003.

In the long term, we believe the company will recover because there is a solid underlying business. As such, those who still hold the shares should sit tight.