The Investment Column: Muted reaction to Oxford Instruments' profits

Our view: Hold

Share price: 233p (+1p)

Beam line magnet systems and helium system cryostats are just two of the products made by Oxford Instruments, a producer of high-tech tools.

Investors may not have a clue what either of these devices is used for, but they will be encouraged after the company posted impressive full-year numbers yesterday; adjusted pre-tax profits were up 26.7 per cent to £9.5m, while earnings per share rose 21.9 per cent.

Investors have done well out of Oxford Instruments this year. The shares were trading at 166p on 22 January and have risen consistently since then.

Analysts at Arbuthnot, who recommend a buy, reckon the stock will reach 258p in the next year.

Impressive? Not really. The shares have traded as high as 309p in the past 12 months and while yesterday's numbers are good, they are no better than was expected.

The market's reaction yesterday was muted, with the stock up less than 0.5 per cent.

The group's brokers at Cazenove are cautious saying the stock valuation is "in line". They add that while the shares look attractive, they are only worth a punt if the management's five-year plan of doubling revenue from the 2006 level of £147m and increasing the operating margin to 13 per cent can be achieved. They say that this is all conditional on acquisitions.

Jonathan Flint, the chief executive, points out that the group is on track to meet these objectives and has already bought two new companies since the end of the reporting period on 31 March. Mr Flint also argues that while the company is by no means immune to the credit crunch, the niche technology sector is as much a safe haven as anywhere else.

Trading since the end of March has been in line with expectations, he adds.

Investors could probably safely assume that Oxford Instruments is a safe bet. However, most investors will probably prefer to wait for further evidence that the five-year plan is working and that the stock is not stymied. Hold.

Peter HambroMining

Our view: Buy

Share price: 1,295p (-4p)

Peter Hambro, the chief executive of the mining group that bears his name, says that he is a cautious human being.

He also describes his gold mining company, which produces nearly 300,000 ounces a year from its mines in Russia, as a Russian company. This will no doubt help the group in its latest venture – and many could see it as being a less-than-cautious move – buying a stake in the Venezuela-based gold miner Rusoro, a Russian-owned and Canadian-listed group.

Mr Hambro says that there is "great affinity for Russia" in Venezuela and anyway, business is about judging risk and managing it. Investors have enjoyed a good run with Peter Hambro Mining recently.

In April, full-year results showed a 22 per cent increase in pre-tax profits, which enabled the AIM listed group to pay its first dividend.

They will be less impressed by the volatility of the stock, which has traded between 1,640p and 880p over the past 12 months; strange considering the strength of the gold market.

Mr Hambro says that he has no idea why this has happened but he does reckon that the price of gold will soar in the coming months as global financial uncertainty continues.

The company's brokers at Cazenove say that "Peter Hambro remains a very cheap gold play". They add that the initial investment of $20m (£10.2m) in Rusoro represents good value.

Those at Liberum agree. They say that Peter Hambro's valuation lags behind that of its competitors, such as Goldcorp, which "trades at multiple times its net asset value. And Peter Hambro doesn't, despite planning to increase production to a million ounces by 2011." Buy.

Media Square

Our view: Hold

Share price: 5.9p (+0.25p)

Anyone looking for an example of a company that has managed to get just about everything wrong in recent years need look no further than Media Square, an advertising and communications group.

A profits warning issued in March – after which the company lost nearly 50 per cent of is value – was just the latest bad news in a long line of poor financial performances, over-ambitious acquisitions and losing clients.

Step up Roger Parry. A former BBC reporter and previously an ITV suitor, Mr Parry was hired in July to rescue the group. He did what most new leaders of struggling companies do and launched a resurrection plan, over three years.

He says the group has cut out most of the bad businesses and has in place a better plan to utilise key people, who in turn are locked in to the group through equity options.

New business has been signed up with the likes of Cadbury and Lotus.

Mr Parry also reckons that the group is cheap; on revenues of £78m he says that a group like Media Square should make profits of £11m. His firm makes only £100,000, but that will improve, he insists.

It will be a long road back for Media Square and it will be made only more difficult by advertising budgets being slashed by companies worried about declining consumer confidence. Media Square is improving, but investors should certainly wait a while longer. Hold.