The Week in Review: Food firm's shares are a tasty treat

There was much hilarity when the celebrity chef Loyd Grossman announced, after a tasting tour of the National Health Service, that hospital dinners were no longer the horror show of old. If not exactly haute cuisine, they do at least now provide hot cuisine, and the improvement may be in some small measure down to the likes of Compass Group.

The company, the UK's largest catering business, has been blazing a trail in outsourced food services, not just taking over catering in the NHS, but in schools and universities and large companies. Add to that motorway service stations, Upper Crust and Au Bon Pain concessions in railway stations and airports, and other contract catering operations, and Compass has a well-stocked larder of businesses.

There is plenty of growth to go for because, although Compass is the biggest group of its kind in the world, it still has a market share of just 4 per cent. The benefits of scale should allow it to undercut rivals and continue to win new business. Buy.

Woolworths

Future success for Woolies should come from growing margins rather than sales. The group will concentrate on getting better deals from fewer suppliers. Shrinkage (the retail word for theft) is being tackled by scanning staff when they leave for home. Own-brand ranges are being expanded and upmarket home accessories being introduced. It's back to retail basics and, with earnings growth of 20 per cent forecast this year, the shares look cheap. Buy.

Barratt Developments

Barratt Developments' interim results were an impressive tribute to Frank Eaton, its former chairman and chief executive who died in a car accident last October. The group is also among the most diversified in the housebuilding sector, and should prosper as long as the slowdown in house-price inflation does not turn into a crash. Its large land-bank and expertise in urban regeneration are also big pluses. Hold.

Hiscox

Hiscox, which counts insuring the art collections of the wealthy among its specialities is back in the black. The 11 September attacks boosted demand for insurance just as it wiped out a lot of the industry's capital and, therefore, ability to provide cover. Robert Hiscox, chairman, believes the imbalance will ensure premiums stay high for some time. Hold.

Northern Foods

Northern Foods might have been able to put up the price of its Fox's chocolate digestives, but tough competition and higher raw materials prices are still present in other parts of the group. New investors should steer clear until the business starts to restructure. Existing shareholders can comfort themselves with a 7 per cent dividend yield. Hold.

Collins Stewart

The downturn at Collins Stewart has not been nearly as savage as that experienced by rival stockbrokers, partly because it has acted to safeguard the independence of its investment research. But its relative success is reflected in a high share price, and it is still a risky time to invest in a company so dependent on the fortunes of the stock market. Avoid.

Forth Ports

Forth Ports, the Scottish harbours business privatised a decade ago, has the great fortune of sitting on property ideal for trendy waterfront residential property schemes. That provides the sauce to an otherwise dull but steady ports operator. Analysts calculate that, if broken up, the sum of the parts would value the group at 40 per cent more than the share price. Attractive.

Pilkington

Is there going to be a dividend cut at Pilkington, the renowned glass-maker? Stuart Chambers, chief executive, promised to move heaven and earth to maintain the payout and, as time goes on, confidence is growing that he can succeed. But he is not getting any help from a sluggish global glass market and it is too early to feel confident about Pilkington's recovery. Investors need not rush in while the economic future is seen only through a glass darkly.

Enterprise

Repairing leaking water mains and fixing phone lines might not be the most glamorous of businesses to be in but they are producing a nice income stream for Enterprise. It has big ambitions and is aiming to treble annual sales in three years and, with £1bn of business in the bag and £1.5bn under negotiation, it might just get there. The shares, up with events for now, are a hold.

Peterhouse

Having sold its construction business, Peterhouse is focused on skilled maintenance work for the likes of the rail network and National Grid. Network Rail, the successor to Railtrack, plans to take a lot of the work back in-house after the Potter's Bar rail crash, and while the situation is in flux it is too early to buy into the new Peterhouse story. Avoid.

Next

Next is one of the more dependable high street retailers. It has a wobble now and then, normally when it tries to be too trendy, but it usually bounces back and has a record in growing earnings that some FTSE 100 companies would kill for. It will grow this year because of more Next Directory mail-order catalogue customers and a big push to open new stores and enlarge existing ones. It is also buying back its shares. Hold.

Alpha Airports

The group has two parts to its business: in-flight meals for full-service airlines, balanced by duty-free retailing at regional airports and trolley food on no-frills airlines. Some of what it has lost as full-service airlines retrench, it has gained from the rise and rise of easyJet and Ryanair. Alpha Airports is making progress and should prosper in the medium-term. Hold.

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