Companies: CLM    DON    GFRD    GHH    PHP    WNDR   

Few companies have posted 33 per cent share price gains this year, which makes the performance of Claims People, the loss adjuster recommended in Company Watch in February, all the more remarkable.

We highlighted Claims on the back of its burgeoning business pipeline, specifically its recently-won £1 million contract from insurance giant CGNU.

In 2001, losses hit £934,000 on turnover of £303,000. But this year claims work from CGNU should contribute around £400,000 to the top line. Meanwhile there are several other large clients on board, including HSBC, Royal Bank of Scotland's NatWest arm and insurance broking giant Marsh & McLennan.

At the company's annual meeting in May, chairman John French said significant cash balances (£191,000 at December 2001) together with an increasing volume of work should allow the group to push through into profit in due course. French reckoned the firm could be moving towards breakeven 'by the end of July'.

David Parnell at house broker Durlacher is predicting a £200,000 loss in the year to December 2002, on turnover of £1.3 million.

While Parnell has not produced forecasts for the year after, he believes Claims will produce a small profit at the interim stage to June 2003. The difficulties of other operators in this space could also allow the group pick up extra business.

The shares have moved from 1.5p to 2p, and have been as high as 3.5p. They are not to be sold.

Asset strength at Primary Health

After a fine run of form in the first half of the year, shares in Primary Health Properties have edged back to 175.5p, from our May recommendation price of 181.5p. But the asset backing, earnings, dividends and potential growth that the company offers remains as attractive as ever, especially for more cautious investors.

PHP is the largest property owner in what analysts reckon is one of the safest niches: small, purpose-built doctors' surgeries. It is also an area with plenty of growth potential, given the amount of money that is flowing into the National Health Service and the Government's enthusiasm for small, purpose-built, one-stop health centres in which PHP specialises.

Final results are due soon, with any surprises much more likely to be on the positive rather than negative side. KBC Peel Hunt analysts Keith Crawford and Dan Horwood expect pre-tax profits to come in at around £1.8 million. Continuing low interest rates could result in a higher figure.

Earnings per share should be around 9.4p, most of which should be paid out in dividends. This gives the shares a forecast dividend of 5 per cent and puts them on 19 times likely earnings.

On 2003 forecasts of £2 million pre-tax profits, 10.1p earnings and a 10p dividend, the prospective p/e falls to 17, while the yield increases to 5.5 per cent. This is attractive enough for investors looking for a safe haven, but the valuation is further backed by the company's property.

Its net asset value is expected to have increased to 174p by the end of June, and is forecast to rise to 192p by the end of 2003. Definitely one to keep tucked away.

SFI surges as Dontantonio slips up

Another February recommendation enjoying strong trading is SFI, the bar group behind brands such as the Slug & Lettuce, Bar Med and The Litten Tree.

We advised readers to pick up the shares at 217.5p and, although they have followed the market down, the group has produced a stream of good news.

Interim figures were impressive, with sales surging 30 per cent to £73 million and profits up 22 per cent at £9.3 million.

A bullish trading update followed, in which chief executive Andrew Latham said figures for the full year to May would match market expectations.

Latham added that SFI had almost integrated its newly-acquired Parisa bars. He also said discussions over the disposal of table-dancing chain For Your Eyes Only were 'progressing'.

House broker KBC Peel Hunt expects pre-tax profits of £20.5 million, giving fully-taxed earnings of 18.2p.

At the current 176p, the shares trade on a prospective p/e ratio of 9.7, falling to just over 7 for 2003. KBC Peel Hunt believes a fair value is 350p.

If you did not buy first time round, you should consider doing so now.

The situation at food distributor Donatantonio is not so promising. Cautious noises from the company and the sight of a significant shareholder (from the Donatantonio clan) offloading a slug of shares a few weeks back have pushed the shares down to 70p (from our recommendation price of 73p).

Trading worries cited by the company include various 'uncertainties' in the food service sector. The board has also warned that the enduring popularity of budget airlines such as EasyJet (which do not need airline food products) is also causing concern.

One bright spot is that the core business of supplying food manufacturers is as robust as ever.

Although changes to the business have been implemented and various cost-saving measures initiated, first-half profits for the period to July 2002 are likely to fall below those achieved in 2001.

House broker Fiske remains bullish about its long-term prospects, but expects profits for the year to January 2003 to come in at around £1.25 million (£1.7 million).

If it can adapt to the tough environment, Donatantonio could bring rewards. Hold.

Budgens' supermarket sweep

Local convenience store operator Budgens was first touted as a 'Buy' by Growth Company Investor in July 2001 on the basis that it was ripe for a takeover by Irish food group (and 43.5 per cent shareholder) Musgrave.

The bid, an attractive cash offer at 135p per share, duly arrived in June. Any investor who has not yet accepted this should do so. It represents a considerable premium to the 86.25p the shares changed hands for last year.

At present, Musgrave has valid acceptances for 82.8 per cent of the shares, and the offer has been extended to enable it to mop up the residual holdings.

Galliford Try falls back

Galliford Try has taken something of a beating recently, falling back to 35p on the back of fund manager AMVESCAP selling down its stake.

At this level, the group looks even more like a true value play. It is trading at a mere 6 times prospective earnings for the year just past, and at 5.5 times expected earnings for the current year to June 2003.

The sectors towards which it has been migrating its construction business – utilities, infrastructure, education, healthcare and social housing – are all set to grow strongly in the next few years.

Although construction margins have been suffering, the change in focus is a wise management move given the economic downturn and its likely effects on commercial building markets.

Galliford's housing division has been performing well on the back of a buoyant market for new homes, especially in East Anglia and the West Country. The group has major divisions in both of these areas and relatively little exposure to the more risk-intense central London market.

Teather & Greenwood analyst David Taylor likes the mix of activity and continues to recommend the shares as a good punt at the current price. He forecasts pre-tax profits of £18.3 million for the year just passed, rising to £20.3 million in 2002-3, with earnings per share of 5.8p rising to 6.5p. Buy.

House of Windsor still a buy

The timing of our advice to buy insurance broker Windsor seems inspired, as market conditions have resulted in strong trading in the second half across all divisions.

Increasing premiums, together with strong demand for its services, have impressed broker T&G, which has subsequently upped its full-year forecasts. The broker now expects pre-tax profits of £3.2 million (an increase of £300,000) for the year to September 2002.

This puts the stock on an undemanding prospective p/e of 10.3. Although T&G believes some areas of the business have capacity constraints, this could be relieved by additional online capacity.

At 28.5p, the group is down slightly on the 30p at which we advised readers to buy in June. If you have not got in yet, do so.

Gooch builds for the future

Optical components business Gooch & Housego has easily been one of the more disappointing recommendations this year.

The company fell from our buy price of 157.5p to below the automatic 20 per cent stop-loss following a negative trading statement (and profits downgrade) in May.

At the time, we suggested investors continue to hold the shares – advice that seemed vindicated by a relatively good set of results for the six months to March (turnover rose by 71 per cent to £10.2 million and pre-tax profits jumped 67 per cent to £1.9 million).

Unfortunately, the results did little to boost the stock, mostly due to chairman Archie Gooch's comments that the G&H board was 'fully aware of the potential impact of a deeper recession in the US'.

July provided another glimmer of hope that the company's fortunes could be on the up after it announced it had commenced work on a new factory.

The factory is needed because G&H has witnessed an increase in demand for its Q-Switches following difficulties in the first half of the year. Its current factory does not have the capacity to deal with the increased workload over the longer term.

The new site, which will cost around £3.5 million and take around 12 months to complete, will be funded via debt, cash resources and the proceeds of the sale of the existing factory building.

Happily, the 'factory update' contained no caveats, warnings or anything else untoward, suggesting G&H should have little problem meeting ING Barings' expectations of post-exceptional profits of £2.2 million this year and £4 million in 2003. Hold on.