IMI's restructuring is on track but there's no need to rush in just yet

Taylor Nelson Sofres provides good value; Solid foundations make Bovis Homes a hold

Valves for gas turbines. Supermarket racks for sweets. And those drinks dispensers you have in your office. These are a few of the favourite things made by IMI, the engineering group that has been in the process of transition.

Since Martin Lamb became the chief executive 18 months ago, several businesses have been sold and the manufacture of high-labour content, but low-skill content products has been pushed abroad to cheaper labour markets such as Mexico and China.

The idea is to have a third of manufacturing in cheaper labour markets so the company can invest in new technology that will differentiate it from commodity-end rivals.

The result has been a share price that has outperformed the sector during difficult times. And while the shares are not particularly cheap on a price-earnings ratio of 17, the yield of 6 per cent is a big positive.

Yesterday's half-year results were slightly better than expectations following a detailed June trading update. Profits were down to £66m (from £68m) but while volumes fell 2 per cent, new products launches helped deliver market share gains to the company's main business of fluid controls (valves) and retail dispensers (Slush Puppy machines and confectionery racks). The bad news is that market conditions remain subdued and Mr Lamb sees no sign of an upturn. The good news is that IMI's restructuring – which included £14m of exceptional costs in the period – means the business will be able to make earnings progress without any help from the wider economy.

The company has £300m of firepower for deals. And this excludes the proceeds from the sale of non-core operations, such as its copper tube and plastic pipes interests.

There is no doubt that Mr Lamb has done all the right things since taking over and the market feels the restructuring is on track. But while the yield is certainly attractive the rating may have got slightly ahead of itself and even the more positive analysts have share price targets of 275p to 280p, which is not much higher than the current 259p.

IMI's one to keep an eye on, then. But there is no need to rush in just yet. Hold.

Taylor Nelson Sofres provides good value

Bad times or no bad times, companies still need to know what makes them tick. In a downturn, that knowledge becomes even more important as businesses clamour to understand their markets even better, seeking to gain that all-important march on their rivals.

Which explains how Taylor Nelson Sofres, the world's fourth-largest market research company, managed to impress the market with interim figures yesterday. The group's assurance that it was on track to meet its full-year forecasts contrasts sharply with grimmer news out recently from its media-sector peers.

A combination of luck that its business is relatively immune to the wider swings of the economy or the media sector and payoff for previous strategy shifts helped TNS to grow underlying turnover by 1 per cent despite market conditions that were "more challenging" than anticipated. It also meant the group could reaffirm that it expected to achieve its target of improving its operating margin by 50 basis points.

Its confidence came partly from the fact that at the beginning of August, 80 per cent of its budgeted full-year revenue was already visible on its order book and partly from the strength of some of its core areas such as healthcare. The 28 per cent rise in underlying revenues from its research for healthcare companies reflected the industry's general buoyancy and TNS's global reach, allowing it to offer the "multi-national" research required by Big Pharma.

Barring a further major dip in the global economy or another one-off event such as last year's terror attacks, pressure on TNS's business is likely to be limited to its so-called "custom research". This tends to comprise one-off projects for businesses looking, for example, to launch a new product and as such it is more discretionary.

Pre-tax profits for the six months to end-June were up 11 per cent to £19m before goodwill charges and flat at £12.8m after them, while acquisitions boosted turnover 9 per cent to £296m. The shares, up 11.5p to 149.5p, have borne the brunt of sector weakness and jitters at yesterday's trading update, making them good value on a p/e ratio of 16 times 2002 earnings. Buy.

Solid foundations make Bovis Homes a hold

Bricks and mortar ought to be a safe investment and Bovis Homes' share price performance over the past few years has underlined the point. The shares have doubled since 1998.

Yesterday's interim results demonstrate that the company is building on solid foundations. Pre-tax profits were up a massive 44 per cent to £41.5m, for the six months to 30 June. And operating margins, at 22.1 per cent, are the best in the industry. The key is clever land-buying for future developments. Bovis has 10,406 plots with planning consent in its landbank. This is the equivalent to four years' supply with options over 20,000 more plots.

The danger for housebuilders is that the runaway property market is a bubble waiting to burst. That fear, which saw housebuilding stocks come off the boil over the summer, appears to be exaggerated.

Malcolm Harris, the chief executive of Bovis, says that, after strong rises in house prices in the first half of the year, the annual price increase of new Bovis homes is now closer to growth in average earnings, ie 4 per cent.

One reason why Bovis can say this is because the company has no exposure to the London market, where a significant correction in prices is more likely.

Interest rates are low and on hold for the foreseeable future, which means that, even after the huge prices rises we have seen over the past year, affordability is still good.

Bovis's average selling price rose from £139,900 last year to £169,300, helped by increasing the space provided in its homes by turning attics into extra rooms. Prices per square foot rose just 5.3 per cent.

The company's shares closed up 8.5p to 409.5p yesterday, putting the stock on a forward multiple of 7. Compared with the wider stock market that looks cheap but then housebuilders never seem to enjoy good ratings. Hold.