The Week In Review: Fire-fighter tries hi-tech gadgetry

Michael Harper, chief executive of the fire safety group Kidde, has had fire-fighting to do within his own organisation.

After the terrorist attacks of 11 September, there was a big drop in sales of its hi-tech sensors and extinguishers for use in new and refitted aircraft. Just to keep the business treading water, Mr Harper has had to trim costs and push through innovative new product launches in its consumer divisions (such as cigarette sensors for teenage bedrooms and CCTV-based flame detectors).

>The signs are that it has been enough to tide the group over. Now there are signs of stability in the aerospace business, and Kidde has won some useful contracts for its safety systems to be designed into new regional jets. The defence side of the business - where Kidde's systems protect jet fighters and tanks - has continued to do well throughout the downturn.

Kidde was demerged from the old Williams conglomerate in 2000 and has been an erratic performer. But health and safety legislation is only likely to get tighter and there are big public education programmes to be undertaken in the US that could get householders to add Kidde's carbon dioxide detectors and fire extinguishers to their panoply of smoke alarms. Buy.

Diageo

Diageo is the world's biggest drinks group. In Smirnoff vodka, Guinness stout, Bailey's liqueur, Cuervo tequila and Johnnie Walker scotch, it has the best-selling brands in each category and they have all performed particularly well in the US. But the fizz has gone out of the alcopop market and Diageo's profits are not accelerating as hoped. With even quality consumer companies struggling, the shares are best left on the shelf until the outlook picks up.

Reg Vardy

Shares in Reg Vardy, the car dealer, have surged 40 per cent since January, on the back of changed European competition rules coming into force in October. These shift the balance of power in the relationship between manufacturers and dealerships. The longer, tighter contracts mean dealers can no longer be held to ransom by the car-makers. The sector should now operate more like it does in the US, where dealership shares are much more highly rated by stock markets. Hold.

Geest

Geest makes supermarket own-brand ready-meals and prepared salads which have been growing in popularity. There was such a serious disappointment last year - when salad sales fell short of expectations - that Geest has struggled to get a hearing in the City since but the company has been forced to increase capacity to meet the demand. Investors who have the appetite for risk will find the shares tasty.

Kensington

Kensington offers mortgages to people who may not get the time of day in their local bank, such as the self-employed and those with a poor credit history. It is a new business building market share in a new niche of the financial services industry, so there is plenty of growth available. Kensington has also stepped up efforts to make its products available through independent financial advisers. All of this should outweigh the obvious downer of a slowing housing market. Hold.

Staffware

Staffware's "business process management software" does just what it says on the label, helps companies manage their business processes. In a bank, for example, it helps automate work needed on loan approvals and mortgage applications. The company has £21m cash in the bank and has just won its biggest contract with an unnamed UK bank, a deal thought to be worth more than £1m. Hold.

Mitie

Mitie, the cleaning, maintenance and security conglomerate, is suffering from low margins and tough competition. So it hopes to grow through pursuing longer, bigger contracts in so, called "bundled services", where it can tie together the services offered by different divisions in different localities and offer them en bloc to nationwide companies. The trouble is, bidding for contracts such as this is costly and Mitie's small size may count against it. The shares look highly valued. Avoid.

Wolseley

Wolseley has become the latest builders' merchant to post a downbeat trading statement. On top of a grumble about the weather, it says the depreciation of the dollar has eaten into the profits it will post in sterling. Luckily for existing shareholders, Wolseley's finances are in rude health. It expects to spend £200m a year on bolt-on acquisitions in a market that is crying out for consolidation, and hopes that half of its sales growth will come from purchases. A solid hold.

Spectris

Spectris, which used to be called Fairey, makes a range of specialist instruments and controls used on factory production lines, such as contamination sensors for the drug industry. It is getting more orders but actual sales are lagging and investors should bear in mind that life can get dramatically better or worse in the blink of an eye. Luckily, Spectris is not overly reliant on any single customer for a large chunk of turnover. Hold.

The Future Network

The Future Network is a magazine group that very nearly did not have a future. It has been through a torrid time but new management appears to have a grip on the business and we can begin to start talking about growth again. It publishes video games mags and computing titles: computer games producers are releasing a slew of big new titles in the run-up to Christmas and will have to promote them hard in the glossy games magazines. Hold.