Teather & Greenwood

'Urbium is the best buy, Regent Inns the worst'

T&G leisure analysts Nigel Popham and Mark Reed have been busy bees of late, putting together research documents on betting and gaming deregulation as well as a note on nightclubs/late night bars. The second piece was perhaps of more relevance in terms of small cap recommendations. T&G sees the tough times for bars continuing throughout 2004 and says the sector is polarising between 'clear' winners and losers, in both the marketplace and on the stock market.

Investors will know the winners by their strong management with clear expansion strategies, their appeal to customers including older and more affluent consumers as well as the younger generation, and their robust finances. T&G's losers have weaker balance sheets, weaker like-for-like sales, a 'scattergun' approach to expansion and outlets appealing mainly to fickle students.

T&G's 'best buy' is Urbium, the venture famed for its Tiger Tiger brand, which has strong positions in the City and the West End. Its earnings growth will come from a recovering London economy.

The second meriting a look is Luminar – the broker says its is an excellent investment opportunity given recent share price weakness after a disappointing trading update. Ultimate Leisure is also recommended, whilst Regent Inns is rated a sell on the weariness of its student-populated Walkabout bars.