Time to switch on to National Grid

Cash injection pumps up CeNeS; The Wireless Group remains in tune

National Grid Transco, the privatised electricity transmission business, has delivered 99.9999 per cent of power successfully over its UK network over the past decade. This extraordinary boast was the company's riposte to criticism in the autumn, when power cuts brought disruption to London and Birmingham. It was at it again yesterday, talking up its UK business at a seminar for investors and analysts.

With plenty of justification, actually. NGT is still investing up to £400m annually in the electricity network. Meanwhile, results last week showed how well the integration of the gas pipelines business Transco is going, following the acquisition of Lattice in 2002. There will be £135m of annual savings achieved by March, and a further 35 per cent reduction in costs at the local gas distribution networks over five years. Attendees came away yesterday with confidence that NGT's respected management will hit those targets and then some.

There was also much discussion of the five local gas networks that NGT has tagged for possible sale. The first auction is expected within months and some analysts believe it could raise about 10 per cent more than the value at which the network is on NGT's books. That in turn could crystallise people's views as to the worth of the group as a whole, whose shares have, disappointingly, drifted lower since the merger.

Part of the problem has been the relatively modest dividend, but that too might be coming right, following a 15 per cent increase at the interim stage, a similar rise later this year and then the promise of 7 per cent growth per year until 2008.

An investor buying the shares now will have a dividend yield this year of 4.9 per cent, rising to more than 6 per cent. There are more lucrative utility investments, but they don't have the upside potential for the share price, too. NGT is reinvesting the gas distribution sale proceeds in expansion in the restructuring US power market and its stock is cheap on a multiple of earnings.

Buy.

Cash injection pumps up CeNeS

Cenes Pharmaceuticals didn't look far for its new merger partner. It is buying its next door neighbour in Cambridge, TheraSci, which also happens to be a company funded by Alan Goodman, the CeNeS chairman. Mr Goodman and other TheraSci investors have fattened up the company with the injection of £1m of new cash, which will mean CeNeS still has two years' of money in the bank, even after taking on the costs of developing TheraSci's portfolio of potential new drugs.

Best of all, the takeover is accompanied by a deal to buy the rights to a novel sedative - to be used as a quick 'n' easy anaesthetic for day surgery - from GlaxoSmithKline, which will own 5 per cent of CeNeS shares. So it's complicated, but it looks a good deal for CeNeS shareholders, and the stock was up 0.5p to 7.62p.

It means that this little company, whose history might most politely be described as "chequered", now has a modest but attractive portfolio of well-researched drugs to combat pain. Its most advanced, M6G, is a derivative of morphine which had been licensed to the cash-strapped Irish company Elan. Now CeNeS has extricated itself from that relationship, it can search for new partners. The newsflow from here could push the shares higher. Have a punt.

The Wireless Group remains in tune

The Wireless Group, the radio company run by the irrepressible Kelvin MacKenzie is seeing an upturn, along with the rest of the industry. In a trading update yesterday, the company revealed a 24 per cent jump in revenues for the three months to November.

Revenues for talkSPORT, the national speech-only station, were up 28 per cent in September, 42 per cent in October and 38 per cent in November. The local radio operations saw revenue increases of 11 per cent, 23 per cent, and 19 per cent respectively. We should remember that the comparative months last year were pretty poor but the performance was ahead of expectations.

The virtues of The Wireless Group often get lost underneath all the bluster from Mr MacKenzie, especially his dispute with the radio industry's system for measuring audiences - which he says severely underestimates listeners for talk-based stations.

The company has a sought-after national radio licence and is heading for its first ever profit. The shares closed up 9p at 87.5p yesterday. That is a huge multiple to expected earnings, putting the stock out of the price range of all but the bravest speculators for a while. Wireless, though, has clearly turned the corner and, with News Corp sitting on a 20 per cent stake, there's also a good chance of a bid. Hold.