The Investment Column: Oven maker Enodis puts recovery back on the menu

Property group MWB has a long way to go; Debtmatters is on to a winner

Now that the turnaround is complete and the company's balance sheet is in order, management is free to concentrate on growing the business.

After a few years of difficulty for its main customer base, US fast food chains, Enodis is well positioned to cash in on its expansion. The fast food industry is feeling decidedly more bullish than it was in 2003, when criticism of its menus and practices dented global sales, and is looking east for growth. The Beijing Olympics in 2008 should lead to rapid expansion in China, and with Enodis also supplying hotel kitchens and high-end restaurants with ovens, its new Asia Pacific sales team should have a busy few years ahead.

The likes of McDonald's and Burger King want global product uniformity, so the chances of oven supply being met by cut-price local manufacturers is slim, at least for the time being. The demand for healthier fast food has resulted in increased reliance on new technology and Enodis, with its dedicated research centre in Florida, is at the forefront of developments in the commercial food industry.

Enodis stopped paying dividends a couple of years ago as part of its restructuring plan, but the dividend has been reintroduced, and although it is not much to write home about, giving the stock a net yield of 1.3 per cent, it is a step in the right direction. The small acquisition of Frau Group, a Spanish oven manufacturer, last month will enhance earnings by about 2 per cent this year but the company is actively looking for other bolt-ons.

Enodis is well known for the extreme caution in its statements, but yesterday's upbeat report could be the sign that more good news could be on the way this year.

This is a company that found itself in trouble only to claw its way out by making tough decisions. Furthermore, its management looks set to stay put and the industry it serves is back in growth.

Enodis shares have risen 17 per cent this year, and its stock added another 0.25p yesterday to close at 148.25p, pushing the company's market value towards £600m. Even at this price, however, the stock is trading on an undemanding forward price to earnings ratio of about 12.8 times - cheap compared with its peers. This is a turnaround story that should have plenty more upside left in it. Buy.

Property group MWB has a long way to go

Marylebone Warwick Balfour is the property group behind Liberty, the Regent Street department store, and an odd mix of hotels. It's got the Malmaison chain and the Hotel du Vin boutique as well as several others dotted around London.

The company has long agreed that this mix offers few opportunities for synergy and is committed to returning the business to shareholders one way or another by the end of 2007.

MWB came to market through a reverse takeover in June 1997 and has not always had a good time as a listed stock. Two years ago it plunged to a £110m loss after big write-offs, a collapse that led to a complete rethink of strategy.

Debts must be paid down, but the chief executive Richard Balfour-Lynn notes that the group is on a significant discount to net asset value. If his plan to sell or break up the business is successful, investors could reap big rewards. One disadvantage for anyone thinking of taking a chance is that MWB shares are tightly held - management has 26 per cent. Another is that the group is clearly susceptible to a slump in tourism.

Yesterday MWB restated its earnings for 2005 to come into line with new accounting standards, leaving it with a loss of £15.6m. Its shares dipped slightly to 162.75p. However, the brokers KBC Peel think they are worth 188p, though not many other sector watchers are so enthusiastic.

So are the shares worth a punt? Only if you are an experienced investor prepared to sit tight for at least two years. Otherwise, avoid.

Debtmatters is on to a winner

For every national financial crisis, there's always a winner. In the case of endowment mortgage mis-selling, it was the many "claims farmers" who cashed in on homeowners' misfortune. And with the recent consumer credit boom, it has been the debt management groups who have hit the jackpot.

This is precisely where Debtmatters makes its money - by helping the increasingly large numbers of people who have built up unmanageable debts to get on top of their finances.

Debtmatters sells "individual voluntary arrangements" which allow consumers to combine their debts and agree a manageable monthly repayment with their creditors. As the arranger, Debtmatters also takes a cut, further compounding the misery of its clients' creditors but, it would argue, ensuring they get something back at least.

Since its flotation on the London market in June, business has been booming, and its trading update yesterday revealed that a record few weeks since Christmas is set to boost its earnings beyond current expectations.

The fortunes of such a business are highly cyclical. However, with unemployment on the rise, the fallout of the recent consumer credit boom is far from over. Although its shares were trading at a pricey 26 times this year's earnings - even before yesterday's 19 per cent rise - there is more to come. Buy.