Companies: FDL    PEA    TPT   

Underweight in the retail sector

Seymour Pierce's retail analysts recommend an underweight position for the sector despite February's retail year-on-year sales being up 1.9 per cent on a three-month basis. It believes the buoyancy was due to special promotions and March has been unspectacular. Anticipated interest rate rises will not help.

However, Richard Ratner remains loyal to his early 2004 retail pick of Peacock, refusing to believe the rumours abounding that Peacock is having a tough time and will not meet profit estimates. SP remains convinced the shares are good value.

The broker is keen on home shopping group Findel. Pointing out that recent terrorism events such as the bombing in Spain may have a 'knock-on' effect by adversely affecting city centre shopping, it believes 'mail order companies should do better than the High Street Boys.' The shares for the year just ending have an inexpensive p/e of 10.5.

Topps Tiles is another buy for SP, as it provided a 'stumpingly' good trading statement with interim like-for-likes up 20 per cent and pre-tax profits likely to be at least £3 million higher than SP's forecast. Although its shares have risen 282 per cent in the past year to 776p, SP believes that anyone who disposes of the stock at this level may find it difficult to get back in and are shouting 'Run with your Winners!!'