The Week in Review

Emap faces wave of radio mergers

Wolverhampton & Dudley

Wolverhampton & Dudley, the pubs and brewery group, seems to have done a lot right since it beat off a hostile takeover bid last August. It has been improving its performance – addressing margins and getting rid of underperforming assets – and the shares responded. What it hasn't resolved is its Pitcher & Piano chain of 33 pubs, which it failed to sell. After their rise, the shares are no longer cheap. Hold.

Kingston Communications

The Hull-based telecoms company Kingston Communications is in danger of finding itself among the survivors of the telecoms shake-out. The company, which ended the year with £92m of debt, still believes it is fully funded and analysts reckon it will turn cash flow positive in 2004. The company's capital expenditure is on the decline, signalling the end of its heavy investment phase. While that makes the company seem an attractive bet among the smaller operators, the continuing negative sentiment surrounding the sector means there is probably still plenty of time to buy in.

Bodycote International

It has not been the longest recession in US history, but it has been enough to put a big dent in the reputation of Bodycote International. The group, which tests specialised metals for manufacturers, was telling the City a year ago it might be able to withstand the worst effects of the industrial downturn because, in tough times, manufacturers are likely to want to save money by outsourcing these functions to the likes of Bodycote. Not yet, they're not. Bodycote has won outsourcing contracts, but they take up to two years to negotiate. So for now, profits are still in the doldrums. Even with a penny-pinching new management team, it is not expected to be cash-positive this year. Its generous dividend will have to go if an upturn does not come soon. The shares are too expensive.

Monsoon

Investors who piled into Monsoon when it listed in February 1998 have had a tempestuous time if they have stuck with the high street store best known for its floaty prints and beaded accessories. But Monsoon is showing signs of being a viable competitor to the high street veterans, having made key management changes, including bringing in Rose Foster, who spent 18 years at Next then worked at New Look, to manage its UK business. Most UK retailers have at least an eye on foreign markets because the domestic market is so competitive. One advantage Monsoon has is that its Accessorize chain appears to be more easily translatable abroad than straight clothing businesses, where fashions vary more.

Northern Foods

As the UK's largest producer of packaged meals, Northern Foods should know a thing or two about adding value. For harassed housewives, hungry bachelors and time-pressed career women, Northern's larderful of ready-made products, from pizzas to puddings, add value to their hectic lifestyles. Northern's shares have also added value to investors' portfolios over the past 12 months, thanks largely to their defensive qualities. As demand for convenience food grows, so do Northern's sales to the Big Five food retailers. Underlying sales to Marks & Spencer, Tesco, J Sainsbury, Asda and Safeway – Northern's biggest customers who account for nearly three-quarters of the group's business – have risen 4.5 per cent this year.

GWR

GWR, the owner of Classic FM, is one of the leading radio players expected to enter a feverish round of consolidation, following the publication of the draft Communications Bill. Its results this week were overshadowed by a report that it had held informal merger talks with Capital Radio, although GWR said it is not in talks with any one. The company, which has interests in Europe and Australia, said it would focus on just the UK. GWR is to divest its 25 per cent interest in DMGT Australia, rather than pay – as expected – to acquire the rest of the business. This will help tackle its substantial £160m debt burden. Worth hanging in there.

Greencore

The Irish group slaps fillings between bread for companies from Boots to British Airways at a rate of more than 150 million sandwiches a year. And the business is growing at more than 20 per cent a year, following the rest of Greencore's chilled and frozen foods division, which it bought last year.

But Greencore must complete its restructuring programme and find a solution to its troublesome bread business, Kears, which has been hit by industry over-capacity and supermarket price wars. The shares look cheap against the food sector, but investors should wait for evidence of earnings growth before tucking in.

William Hill

William Hill is under starters orders for a £940m stock market float next month. Private investors have two weeks to place their bets on the UK's second largest bookmaker, which is due to see its shares start trading on 17 June. At the mid-price of the indicative range of 190p to 240p, the shares will trade on a forward price-earnings multiple of around 12. This is a discount to its nearest comparable rivals such as Hilton, which owns Ladbrokes. The abolition of betting tax, the birth of internet gambling and forthcoming deregulation, should provide further boosts. Gambling via mobile phones and interactive televisions is also on the agenda. Worth a punt.

Boots

Boots has finally grasped the nettle with a plan to invest £170m in upgrading its main Boots the Chemist chain over the next four years. The question is whether sales growth with be sufficient to cover the costs. Boots reckons it will need sales uplifts of around 3 per cent to make it pay. Questions remain on the Wellbeing services such as dentistry and chiropody which lost £33m last year. On the plus side, the demand for Botox injections is strong. Share buy-backs and cost-cutting will support the shares, but a 5 per cent fall in customer transactions is a concern. Avoid.

Brewin Dolphin

Brewin Dolphin, the stockbroker, issued a profits warning this year but now looks to be on the mend. Operating profits are beginning to rise, showing that the fall-off in business in the last couple of years is starting reverse. Higher margin business in fund management is also rising. The broker is building up its research department to win more mandates where its fund managers take all investment decisions. Buy.

The above is a selection of recommendations from this week's daily investment columns