Smaller companies spotlight

EACH week, former Fleet Street City Editor Patrick Lay keeps This Is Money readers up-to-date with a neglected, but exciting sector of the stock market - smaller companies.

Stands that deliver

JUST over a year ago I highlighted C A Coutts, a company that makes those stands you see in every supermarket displaying videos and DVDs of the latest blockbuster movies, as well as providing promotional material for the stores and others.

This week, for instance, it has added Citroen to its growing roster of prestigious clients that includes MGM, Disney, Procter & Gamble, Tesco and Penquin Books.

When I first wrote about Coutts the shares were changing hands at around 60p each and the dividend was providing a yield of more than 8%.

Now the shares are trading 50% higher and still offer a yield of at least 5%, virtually twice the amount available in the highest paying building society or bank account.

Company advisors, Williams de Broe, makes the point that the forward order book is currently very healthy in the lead up to the Christmas period and the group has become highly cash generative.

The brokers estimate profits of £1.18m for the current year and £1.4m for 2004, at which time they expect the dividend to rise again and the yield (at today's share price) will rise to 5.5%. Think about it.

Alexandra the great

AS any parent can tell you, housekeeping can be stretched by shopping in the right places. Bristol-based Alexandra, which supplies workers‘ clothing to 200,000 customers, including the NHS and HM Prisons, has learned the lesson too.

Hit, year after year, by buying its clothing on the home market, the decision was taken to shop the world and find where prices were lower.

Tough on UK manufacturers, but good news for Alexandra shareholders who have just seen half-time pre-tax profits rise 20% to £1.87m and benefited from a 6% increase in the half-time dividend.

Chief executive Julian Budd said: 'Using our global buying power we can keep prices lower. We have reduced costs and are now focused on growth.'

Adrian Kearsy, analyst at Evolution Beeson Gregory, clearly believes the focus will pay off; he forecasts pre-tax profits for the current year to come in at £4.3m and is looking for a further £1m in the following 12 months.

Some you may have missed

IT HAS taken 15 months of rigorous performance testing, but it has all been worth while for Sprue Aegis, whose PS-131 (the FireAngel) screw-in smoke alarm has now received US regulatory approval, opening the whole American market to this innovative company.

MARKS & Spencer has signed a contract with Newlands Scientific for 11 of its stores to be fitted with the Whispering Windows system, as part of its promotion of its &more credit and loyalty card.

AIM-listed Statpro is buying 51% of RiskMap, an Italian financial software development company for £280,000.

GX telecoms operator GX Networks is buying Pipex Internet for £55m and is raising £27.7m by a placing of shares with institutional investors.

PAUL Utting has joined the board of Wyndeham Press as group managing director.

BERNARD Pryor and John Bentley have been appointed to the board of America Mineral Fields, the Canadian mining company listed on the Toronto Stock Exchange and London‘s AIM.

Some to look out for

DRU Edmonstone, director of corporate broking at Seymour Pierce, has come out with a 'buy' recommendation for pawnbroker Albemarle & Bond at
91 1/2p a share. Writing on the UK-Analyst.com web tips site, he says the shares offer investors solid long-term growth and recession resilience and sets a price target of 110p for the end of this year.

MICHAEL Blogg, engineering analyst at Arbuthnot Securities, says shares in Castings, at 173p, stand at a 'significant discount to the engineering sector' and rates them a 'buy'. He also likes Hill & Smith, whose shares at 106p stand on a discount of well over 20% to the average P/E for the engineering sector. The shares are attractive, he adds.

PROPERTY group County & Metropolitan has registered a 75% year-on-year compound growth since 1998 and Mark Watson-Mitchell says, on his WatsHot website, the shares are a 'cheap investment purchase' at 197p. He forecasts they will rise to 250p fairly soon and then move to £3 in six months or so.

BUY Fulcrum Pharma for recovery, says Brett Pollard at Seymour Pierce. The company announces its full-year results in the week beginning November 17. Although these are not expected to be good figures, he says: 'The company has laid down a significant amount of investment in resources to secure future growth.'

JUBILEE PLATINUM is a 'highly speculative buy', says Hoodless Brennan. It argues: 'Should Jubilee succeed in finding a platinum reef structure, its future would be bright.'

MEARS , one of this column‘s favourites, has also convinced Roger Brocklebank at Arbuthnot. He believes the shares are worth an 'add' recommendation. He says sales are likely to rise by 8.2% next year and predicts profits rising from £5.1m this year to £5.9m next, and £7m in 2005.