The Investment Column: Cable & Wireless has been gaining ground, but is high-risk

Eleksen Group; Ardana

Our view: Buy

Share price: 129.75p (+3.75p)

Cable & Wireless will today update the market on its progress in the 33 disparate international businesses it controls. This network of assets stretches from Macau to Monaco to Montserrat via the Maldives and has been gaining ground on its local competitors of late, improving its ability to generate cash and profit for the group. Investors should look for news on acquisitions in obscure regions such as Bermuda and Jersey.

Yet C&W's investment case is fundamentally driven by the performance of its UK business which is undergoing yet another radical overhaul. The unit has been a destroyer of reputations - the chief executive, John Plu-thero, is the sixth head of the business in the past 10 years.

Mr Pluthero has set out a clear strategy to focus on its 3,000 most attractive customers while concentrating on improving customer service and sales functions and sharpening up its product line. A high-profile casualty of the shake-up has been the Bulldog broadband business, now sold off to Pipex.

City observers appear to have given the management's plan the benefit of the doubt with many investment banks moving ratings to "buy" and some predicting price gains up to 160p. After dipping below 100p in June, the shares have rallied to 130p due to bid speculation and increased faith in the new UK management team.

Although the group trades at a significant premium to its incumbent rivals - its p/e ratio for 2007 is a huge 44 - the shares are likely to edge even higher on improved sentiment, especially if C&W wins wholesale broadband deals to justify its investment in the network.

Yet be warned - buying C&W shares is a high-risk investment as sentiment will sour overnight if November's interim results do not deliver the improvement the City is banking on. Buy.

Eleksen Group

Our view: Worth a look

Share price: 45p (+1p)

What do you give the man who has everything this Christmas? How about a suit that can control an iPod simply by touching the lining of the jacket?

Earlier this week, a supplier to Marks & Spencer signed an agreement to use Eleksen Group's patented "smart cloth" to produce just such a garment.

Windsor-based Eleksen, founded in 1998 and floated on AIM in May, has developed cloth of coated fibres that conduct electricity. The cloth is connected to a miniature circuit board, chip and a tiny battery. When the fibre is touched, the circuit is completed, allowing current to pass; it is picked up by the chip, processed and transmitted to an electronic device - in this case the iPod.

Eleksen's technology has already been used in a similar fashion in cloth QWERTY keyboards for use with mobile phones and handheld devices.

Yesterday, Eleksen, led by chief executive Robin Shephard, revealed that it shipped 200,000 units - designed here and built in China - to America in the first six months of this year. After an £800,000 write-off, interim losses widened to £2.25m from £1.24m last year.

The shares stand at a 5p discount to their admission price, valuing the firm at £18.4m. No analyst yet covers Eleksen, so no financial forecasts are available. Its technology is exciting and the shares worth a look, but only for the more adventurous.

Ardana

Our view: Buy

Share price: 125p (+0.19p)

Ardana, the Edinburgh-based drug firm focused on human reproductive health, was one of the few biotech companies to float on the stock market last year. It also stands out by already having a product on the market, Striant, a testosterone replacement tablet.

This spring, Ardana excited investors with news that its new testosterone replacement cream had passed an intermediate clinical trial. The cream and Striant offer men an alternative to conventional injections and target a rapidly growing market, currently worth $473m (£250m) in the US alone.

Testosterone shortage is a common problem - about 1 in 200 men suffers from it - and can result in sexual problems, breast enlargement and muscle loss.

Ardana's lead product, with blockbuster potential, is Teverelix, which is being developed to treat prostate cancer, prostate enlargement and endometriosis, a painful condition linked to infertility in women. Ardana's head, Maureen Lindsay, sounded an upbeat note yesterday about ongoing talks with a number of "well-known" pharmaceutical groups interested in licensing Teverelix, which is set to hit the market in two years.

In its first fund-raising round since it floated at 128p in March last year, Ardana raised a net £9.9m at 115p a share yesterday. The proceeds will be used to develop a growth hormone treatment and to launch the overactive bladder treatment Emselex with Novartis in the UK by the end of the year. Ardana's Invicorp, for erectile dysfunction, is also due to hit markets in Europe in the coming months.

Ardana is one of The Independent's stock tips of the year. Given its promising prospects, it remains a buy.