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Part three of Shares’ Full FTSE review focuses on the smaller players. In his introduction to the team’s low-down on all the Small Cap’s constituents Carlo Svaluto looks at how the tables have turned – the feisty fireflies that outperformed their bigger cousins for so long have started to look more like damp squibs, falling behind the larger stocks. Then again, the general hasty retreat from small caps has left a number of winners submerged in its wake, so it’s worth fishing for that undervalued gem using some tried and trusted measures

As recession panic broke out on the world’s trading floors and central banks were spooked into slashing interest rates in many parts of the world last week, a vital area of the investment universe became rather overlooked. Investors could be forgiven for pondering the immediate prospects for smaller company share prices. Small cap stocks have reaped hefty profits for investors in recent years, outpacing the FTSE All Share and Aim All Share indices by roughly 25% between 2003 and 2006. But this trend started to reverse last year, and the recent panic sell-off has accelerated the slump as investors rushed to dump smaller company stocks.

Bleak prospects for the economy, and a generally more risk-averse attitude mean that small caps could lag behind larger ones in 2008, so it’s pretty straightforward that if you haven’t run for safety yet, you should do now.

However, it is very much a case of looking at individual stocks and their individual stories, as virtually every share has been hit in the frenzy, some without good reason. Those shares could turn out to be highly profitable investments given a bit of time.

Indeed, the bull run that started in 2003, and held strongly until the middle of last year, seems to have handed the largest rewards to the most risk-hungry investors. The FTSE Small Cap index, which tracks the bottom 2% of the UK market in terms of market capitalisation, soared 70% since 2003, largely outperforming the FTSE 100, which gained 56% in the same period. That is, if you invested £1,000 in the Small Cap index in 2003, you would be left with around £1,700. However, after the turmoil that started last summer, and that is still storming the world’s equity markets, the tide has turned against small caps.

The Small Cap index is now 20% down from a year ago, after a nastier start to 2008 than the FTSE 100 and the FTSE 250, which are around 7% and 12% down respectively. As the credit crunch gradually broke out and investing in shares simply became riskier, investors shunned smaller companies, looking for secure earnings in larger ones.

Despite the poor performance, in 2007 there were some winners on the Small Cap index too. To name a few, health care company Corin (CRG), a Shares buy in last year’s review of small caps, soared 52% over the past 12 months, partly thanks to strong product releases and rumours of a takeover. Palm oil and rubber producer Anglo-Eastern Plantations (AEP) surged 46% as profits grew, even though very little is known about it and its earnings forecasts. Lloyd’s Insurer Kiln (KIN) gained 35% ahead of a takeover from Japanese peer Tokyo Marine. Industrial engineer Senior (SNR), another Shares buy last year, grew 33% as investors reacted well to news of US acquisitions and despite the exposure to the weak dollar.

Being placed in some gloomy-looking sectors did not help the fallers. Consumer loan provider Paragon (PAG) was the worst, slumping almost 88%, followed by troubled software company SCI Entertainment (SEG), which fell 87%. London Scottish Bank (LSB), retailer Land of Leather (LAN) and media outfit SMG (SMG) also top the list, having fallen 78%, 77% and 75.5% respectively.

Deep roots of the sell-off

Looking closely at the charts, the index started lagging the blue-chips back in May last year and, since then, has constantly widened the gap. This could suggest that investors were able to predict tougher times for equity markets, after the first sell-off in March last year, and started moving away from riskier companies early on.

What initially seemed to be a stock market ‘correction’ turned out to be the signal that a serious global economic slowdown was around the corner, one that required heavy-handed intervention from central banks. So it is not only less appetite for risk and general stock market volatility that threatens the chunky returns made in the past by investors in small cap companies. The market is considering how a sluggish economy and, most importantly, sky-high raw materials prices, could affect companies’ earnings.

Smaller companies are perceived to be most exposed to an economic slowdown, as they don’t have the breadth of activities, the geographical spread and the size to fight off depressed production activity and demand. Many FTSE Small Cap constituents that promised relatively safe growth at relatively low prices, have seen their valuations slashed as their share prices tumbled. Volatility and share prices falling fast are likely to be trends in 2008, especially if the economic backcloth turns more serious than predicted.

While this picture may sound ugly, it does not mean that clever stock pickers will not find great gains. After all, the nosedive of the Small Cap index seems to have been prompted mainly by investor sentiment, as even companies that did not warn about their profits have seen their shares tank. These companies could offer hefty returns to investors that are willing to take the risk of investing in smaller companies during uncertain times.

Sifting out the winners

From a valuation perspective, PEs are at their lowest for years and bargains have been left in the index. When fears on the markets ease, investors will suddenly realise their value. Obviously, there is a strategy to follow. The best one is to avoid companies that have yet to make profits, as 2008 promises may have been dampened in the current uncertain environment.

Investors should stick to companies that are profitable and cash-generative. Also, do not forget the importance of a healthy balance sheet: it might be as difficult to raise additional required funds for a company in the current environment, as it is to renegotiate loans with banks that are less willing to lend.

Some sectors should be avoided, unless there is strong evidence that a company in one of those sectors is unaffected by sector-specific trading issues. Support services companies, the most heavily represented sector on the index, have had a rough ride so far and could continue down this way. Many companies posted profit warnings, and fears of a UK economic slowdown meant investors slashed their holdings even in companies that had yet to warn about their earnings, as the sector is considered to be highly sensitive to economic growth.

Julian Cater, support services analyst at Collins Stewart, says: ‘Attempted selling of shares in smaller support services companies made share prices fall a long way on relatively little volume, as these companies don’t have much liquidity.’ It takes great stock-picking skills to find those that have been hit for no real reasons. However, as to what is going to happen in 2008 Cater believes that if investors start seeing a stabilisation of the market, it is going to be led by larger companies rather than small caps.

Retailers, which make up a large part of the index, are at the mercy of the UK consumer. While results of their larger peers have been mixed and sometimes positively surprising, the Bank of England’s cautious stance on interest rates is not reassuring for consumers, especially at a time when mortgages and debt cost more.

Some software and technology companies, which also weigh on the index, took a battering, and the picture is mixed in 2008. Stuart Lunn, technology analyst at Collins Stewart, agrees that investors should look at individual stocks within the sectors, as some may be exposed to markets were spending patterns are more predictable.

He says: ‘Smaller companies with large enterprise customers might find it difficult in 2008 as some large customers could cut the number of suppliers or look for more solid suppliers.’ On the other hand, companies with an exposure to sectors such as healthcare will be safer, whereas software firms that work in the financial sector could see banks cut spending, although some that have risk-monitoring products could do well.

Pharmaceutical and biotechnology stocks are also well represented on the index. Some of these companies could struggle, reckons Navid Malik, pharmaceuticals analyst at Collins Stewart. He says: ‘Smaller companies that are struggling to get products through development are running lower and lower on cash. The risk is that they run short of money and have to come back to the market to raise more funds, which is difficult at the moment.’

Golden rules

However, he points out that valuations have been crunched quite significantly, and the larger companies could be attracted to acquire certain businesses where there is value. In this sector, investors should focus on firms that have products at late stages or ones ready to have a licence, as well as enough cash to survive for at least twelve months.

If you are out scouting for bargains among small caps, liquidity is fundamental. You have to be sure that you are able to get out quickly if things don’t look pretty. Little liquidity for small cap stocks prompted large losses for many investors this year. Jason Streets, head of research at Evolution Securities says: ‘I think the market plays off the higher growth potential of smaller companies against what should be an illiquidity discount. When things are going well growth is more important; in a reversal, liquidity takes more prominence.’

Another part of the strategy should be to focus on companies that have relatively wide geographical spreads. Globalisation means that even smaller firms have been able to spread their activities across the globe and these are the ones that will do best in 2008. While the US and in response the UK and EU economies may suffer, many other national economies will still grow strongly. Meanwhile, companies only focused on the UK could suffer even if they work in the most defensive sectors.

Some think that an economic slowdown will not affect small caps more severely. James Henderson, manager of the Henderson UK Equity Income Fund, which has quite a large weighting in smaller companies, says: ‘A difficult economic backdrop need not be a poor period for small companies. This is when real value can be bought. Virtually all small companies have fallen, regardless of their prospects, and this indiscriminate selling will prove to be a marked overreaction, to be ultimately followed by a return to valuations based on fundamentals.’

Henderson adds that the weighting in small caps has proved very beneficial to the performance of the fund since 2003. He says: ‘Smaller companies over time do add value, and offer greater diversification benefits than can be achieved with a large-cap-heavy portfolio. However, such is the nature of small caps that there will always be periods of uncertainty that will prompt investors to desert the area. These negative periods are important because they provide an ideal time for a manager to consider how to refresh a portfolio – adding stocks as well as increasing certain holdings.’

It would take the average investor a lot of work and time to identify which are the safer plays on the FTSE Small Cap index. However, Shares readers have had much of the work done for them, in these pages, with the background of every small cap stock explained, plus a takeover rating and stock recommendation. While the companies may be small, the returns needn’t be, if you bet on the best-placed firms.

Aerospace & Defence

by: Timon Day

Hampson Industries (HAMP) 147p

Market value: £140m

PE: 10.6 EPS growth: 38.1%

Yield: 1.2% 3 mth rel str: -21.1%

Takeover potential:2

The buoyant aerospace sector should keep Hampson humming but delays in both Airbus and Boeing programmes don’t help. Also sales of commuter jets in America could be badly affected by the economic slowdown. If earnings do grow 30% in 2008 the shares will jump depending on the outlook.

SHARES VIEW: Now HOLD Last Year BUY

Umeco (UMC) 548p

Market value: £264m

PE: 12.9 EPS Growth: 18.8%

Yield: 3.4% 3 mth rel str: 1%

Takeover potential: 2

Being less of a go-go company has its advantages when a bull market ends. Steady as she goes is more like it, with spare parts for Rolls-Royce engines unlikely to dry up any time soon. Making composite parts for aeroplanes is also a growth area.

Shares view: Now HOLD Last Year HOLD

Beverages

by: John Marshall

Barr (AG) (BAG) £11.29

Market value: £208m

PE 14.2 EPS growth: 1.1%

Yield: 3.5% 3 mth rel str: -1.6%.

Takeover potential:3

The company has a very strong brand –

Irn-Bru – which is especially popular in its Scottish heartland. Group has been trying to diversify the portfolio by a series of modest acquisitions. Strong brand could excite a bid.

Shares view: Now HOLD Last Year SELL

Chemicals

by: Rachel Robson

Delta (DLTA) 102p

Market value: £156.8m

PE: 9.6 EPS growth: -16.3%

Yield: 4.4% 3 mth rel str: -10.9%

Takeover potential: 3

Galvanizing and Engineered Steel Products businesses have performed well, but once again its Electrolytic Manganese Dioxide arm has suffered due to difficult market conditions and adverse exchange rates. Ceasing production at its EMD Australian plant.

Shares view: Now SELL Last Year SELL

Elementis (ELM) 59.3p

Market value: £264.5m

PE: 7.8 EPS growth: 13.2%

Yield: 4.5% 3 mth rel str: -36.1%

Takeover potential: 4

Has sold its Pigments business for $140 million and reduced debt through positive operating cash flow. Demand remains strong in most key markets, although North American coatings has been affected by slowdown in US housing market.

Shares view: Now BUY Last Year HOLD

Yule Catto (YULC) 158p

Market value: £230.2m

PE: 8 EPS growth: -15.6%

Yield: 6.2% 3 mth rel str: -25.8%

Takeover potential: 4

Its polymers business has showed good volume growth, supported by new capacity which has come on stream in Malaysia. However, its pharma business continues to be affected by price erosion in the US and European markets.

Shares view: Now HOLD Last Year HOLD

Construction & Materials

by: Carlo Svaluto

Clarke (T) (CTO) 170p

Market value: £67.7m

PE: 9 EPS growth: -4%

Yield: 7.1% 3 mth rel str: 6.2%

Takeover potential: 3

The electrical contractor is in better shape than a year ago, with a larger order book and £50 million worth of new projects. Expectations for the full year should be met but the shares have dipped last year.

Shares view: Now HOLD Last Year HOLD

Costain (COST) 24.3p

Market value: £153m

PE: 8.3 EPS growth: -25.8%

Yield: 3.1% 3 mth rel str: -27%

Takeover potential: 3

The construction company kept well on track with its restructuring programme. All the divisions are trading strongly and profitability has been improved. The shares have suffered and the current environment justifies a degree of caution.

Shares view: Now HOLD Last Year HOLD

Ennstone (ENN) 29.25p

Market value: £142m

PE: 10 EPS growth: -4.2%

Yield: 5.7% 3 mth rel str: -16.6%

Takeover potential: 2

The quarry operator and aggregates maker is heavily exposed to the US residential housing market, and this has not boded well for shares. The management, however, said final results should be in line with expectations.

Shares view: Now HOLD Last Year HOLD

Gleeson (MJ) (GLE) 290p

Market value: £151.5m

PE: 69.9 EPS growth: n/a

Yield: 3.1% 3 mth rel str: -6.7%

Takeover potential: 2

The company is focused on the regeneration sector and has some flagship projects on its portfolio. It has been winning new business and the interims should not surprise negatively, but wait for the valuation to come off.

Shares view: Now HOLD Last Year BUY

Low & Bonar (LWB) 100p

Market value: £154m

PE: 7.5 EPS growth: -9.5%

Yield: 5.5% 3 mth rel str: -9.1%

Takeover potential: 3

The technical flooring and textile maker has just inked a number of acquisitions that were well received by the market. After an upbeat trading statement last month, directors have lifted their stakes.

Shares view: Now BUY Last Year HOLD

ROK (ROK) 105p

Market value: £186.2m

PE: 6.9 EPS growth: 6.6%

Yield: 3.8% 3 mth rel str: -43%

Takeover potential: 2

The shares have been hit by bad sector sentiment, but Rok is a gem and the acquisition programme is on track. Results should be well ahead of last year, so the blip is a chance to buy.

Shares view: Now BUY Last Year BUY

Styles & Wood (STY) 118.25p

Market value: £76.2m

PE: 8 EPS growth: 77.1%

Yield: 3.5% 3 mth rel str: -17%

Takeover potential: 3

The group provides construction services to retailers, and said the second half of the year was strong. However, if UK consumer spending slows down, retailers won’t have to spend much on shop refurbishment.

Shares view: Now HOLD Last Year BUY

Superglass (SPGH) 125.5p

Market value: £73.2m

PE: 9.7 EPS growth: 81.2%

Yield: 4.2% 3 mth rel str: -24.7%

Takeover potential: 2

The newly floated maker of glass mineral fibre insulation products first sounded upbeat, but two weeks ago said that turnover was going to be below expectations as the implementation of the Carbon Emission Reduction Target was delayed.

Shares view: Now BUY Last Year n/a

Electronic & Electrical Equipment

by: Carlo Svaluto

Domino Printing Sciences

(DNO) 265p

Market value: £293.2m

PE: 12.1 EPS growth: -1.49%

Yield: 4.1% 3 mth rel str: -8.8%

Takeover potential: 2

The printing specialist posted decent full year numbers last December, albeit spoiled by currency translations. It is not immune to slowing economic growth but it has a strong client base and printing standards are going in its favour too.

Shares view: Now HOLD Last Year BUY

E2V Technologies (E2V) 237p

Market value: £147m

PE: 8.1 EPS growth: -10.5%

Yield: 3.4% 3 mth rel str: 3.4%

Takeover potential: 2

Acquisitions made in 2006 are still benefiting the group, which has been winning contracts and growing the order book. Lower capital goods expenditure could weigh on sentiment, but E2V is a quality business.

Shares view: Now V Last Year BUY

Oxford Instruments (OXIG) 172p

Market value: £84.8m

PE: 12.2 EPS growth: 198%

Yield: 4.8% 3 mth rel str: -13.1%

Takeover potential: 2

The developer and manufacturer of advanced instrumentation said that revenues would be in line with forecasts at the interim results. Recent acquisitions are benefiting the group and the shares should have priced in a slowdown.

Shares view: Now BUY Last Year HOLD

Raymarine (RAY) 231.75p

Market value: £187.63m

PE: 9.2 EPS growth: -7.6%

Yield: 5% 3 mth rel str: -6.2%

Takeover potential: 2

The company recently said revenues and gross margins were in line with expectations and brokers are bullish, but the maker of navigation equipment is largely exposed to the US and the marine leisure industry.

Shares view: Now HOLD Last Year HOLD

TT Electronics (TTG) 87.25p

Market value: £135.2m

PE: 6.2 EPS growth: 562%

Yield: 11.4% 3 mth rel str: -33.2%

Takeover potential: 2

Exposure to Germany and the US doesn’t bode well for the automotive electronics group. TT released a profit warning last December, which highlighted the effect of the weak dollar. The monster yield could are attract contrarian investors.

Shares view: Now HOLD Last Year BUY

Xaar (XAR) 147.5p

Market value: £92.7m

PE: 13.3 EPS growth: -28.1%

Yield: 1.9% 3 mth rel str: -20.4%

Takeover potential: 3

The group had a tough 2007 but is recovering. The full-year results should show improved profitability and the future prospects are good. The dividend will be increased by 25%.

Shares view: Now BUY Last Year BUY

Fixed Line Telecommunications

by: Russ Mould

KCOM Group (KCOM) 46.25p

Market value: £238.6m

PE: 8.7 EPS growth: 2%

Yield: 4.7% 3 mth rel str: -21%

Takeover potential: 4

Formerly known as Kingston Communications. Hull-based provider of IT and telco services to small and medium-sized businesses generates excellent cashflow, though spending cutbacks at its clients due to an economic downturn remains a risk. Decent dividend yield.

Shares view: Now BUY Last Year BUY

Telecom Plus (TEP) 199p

Market value: £131.3m

PE: 11.2 EPS growth: 12%

Yield: 6.5% 3 mth rel str: 36.7%

Takeover potential: 2

The shares of the supplier of gas, electricity, internet and telephone services to consumers and small businesses soared after punchy interims in November, when dividend payout was doubled. May now be due a pause for breath but buybacks continue and looks a relatively safe haven.

Shares view: Now HOLD Last Year BUY

Thus (THUS) 118.5p

Market value: £217.9m

PE: 23.2 EPS growth: n/a%

Yield: n/a 3 mth rel str: -6.3%

Takeover potential: 2

Delivered a maiden interim profit and a successful £110 million refinancing in November, and provider of telco services to businesses looks cheap after recent crunching sell-off, but still looks sub-scale in a highly competitive market.

Shares view: Now HOLD Last Year HOLD

Vanco (VAN) 185.25p

Market value: £118.5m

PE: 5.8 EPS growth: 29%

Yield: n/a 3 mth rel str: 30.2%

Takeover potential: 2

Three disappointing trading statements and worries about cashflow crushed the virtual network operators' share price last year. New chief financial officer Peter Johnston has targeted debt reduction and has a £421 million backlog with which to work.

Shares view: Now BUY Last Year BUY

Food Producers

by: John Marshall

Anglo-Eastern Plantations

(AEP) 465p

Market value: £186m

PE: 20.7 EPS growth: n/a

Yield: 1.2% 3 mth rel str: 43.1%

Takeover potential: 4

Specialises in cultivation of cocoa, rubber and palm oil. Immediate outlook is encouraging. Will the 50.7% shareholder - Genton International - decide to acquire the minority? No broker interest - no forecasts in the market.

Shares view: Now HOLD Last Year HOLD

Cranswick (CWK) 846p

Market value: £389m

PE: 15.3 EPS growth: 12.1%

Yield: 2.3% 3 mth rel str: 10.2%

Takeover potential: 2

One of the more successful food processors. Group has made a number of earnings-enhancing acquisitions. Seeks niche markets. Well regarded by retailer customers and the City.

Shares view: Now BUY Last Year HOLD

Devro (DVO) 91p

Market value: £148m

PE: 13.9 EPS growth: -14%

Yield: 5% 3 mth rel str: 10.8%

Takeover potential: 3

Takeover talks failed last year. Will predator return? Group specialises in casings for food manufacturers - leading manufacturer of sausage skins. Despite better H2 immediate outlook is unexciting.

Shares view: Now HOLD Last Year HOLD

Hilton Food (HFG) 181p

Market value: £126m

PE: 12.2 EPS growth: n/a

Yield: 4% 3 mth rel str: 13%

Takeover potential: 3

The group supplies meat to Tesco (TSCO) and Ahold. Seeking to increase its exposure to Tesco. One of 2007’s better floats, the shares were placed at 150p. Larry Goodman, the Irish meat entrepreneur, holds some 5% to provide speculative appeal.

Shares view: Now BUY Last Year n/a

REA Holdings (RE.) 600p

Market value: £195m

PE: 22.2 EPS growth: 18.8%

Yield: 0.3% 3 mth rel str: 33.6%

Takeover potential: 3

The group specialises in the production of palm oil in Indonesia and has been a major beneficiary of strong soft commodity prices. Little broker interest, however. Low yield could discourage some investors.

Shares view: Now HOLD Last Year HOLD

Robert Wiseman (RWD) 550p

Market value: £405m

PE: 161 EPS growth: 10.5%

Yield: 2.5% 3 mth rel str: 27.9%

Takeover potential: 1

First Milk’s 15.6% stake and family holdings make a takeover unlikely. Group has so far managed higher costs. However, will supermarkets be less amenable in 2008%? Dominates Scottish market.

Shares view: Now HOLD Last Year SELL

Uniq (UNIQ) 127p

Market value: £146m

PE: 38 EPS growth: n/a

Yield: 5.5% 3 mth rel str: -34.1%

Takeover potential: 2

Recent trading update was disappointing. Profits recovery in UK and France offset by poor results in Northern Europe. Agreement with pension trustees could tempt predators to return. Might merge with Northern Foods (NFDS).

Shares view: Now BUY Last Year BUY

Food & Drug Retailers

by: John Marshall

Thorntons (THT) 153p

Market value: £104m

PE: 16.9 EPS growth: 22.7

Yield: 5% 3 mth rel str: -11.8%

Takeover potential: 4

Group’s strong brand and reliable cashflow have excited bids in the past. Predators could return. Enjoyed modest growth over Christmas. Strategy is to stretch the brand via licensing and increased sales through other retailers.

Shares view: Now SELL Last Year SELL

General Financial

by: Simon Keane

Brewin DolPhin (BRW) 114.5p

Market value: £293.9m

PE: 9.5 EPS growth: 5.9%

Yield: 4.9% 3 mth rel str: -22.7%

Takeover potential: 1

The shares down about 40% since last year as market anticipates private investor activity slowing down. Positives are low PE, fact that half of funds under management are discretionary, so less flighty, and £87 million in cash at September year end.

Shares view: Now HOLD Last Year HOLD

Charles Stanley (CAY) 259.5p

Market value: £100m

PE: 8 EPS growth: 10.7%

Yield: 4.2% 3 mth rel str: -17.2%

Takeover potential: 1

Like rival private client broker Brewin, the shares are down about 40% since last year. Although also has relatively large cash pile (£28.3 million at September half year) and now trading on low PE, making the stock a hold.

Shares view: Now HOLD Last Year HOLD

Charles Taylor Consulting

(CTR) 308.5p

Market value: £124m

PE: 9.5 EPS growth: -0.15%

Yield: 4.7% 3 mth rel str: 5.8%

Takeover potential: 1

The company’s run-off division – it manages closed insurance funds – has struggled to make acquisitions. In addition the company has been hit by the weakening dollar as it generates a lot of its revenues from the US.

Shares view: Now HOLD Last Year BUY

Evolution (EVG) 114p

Market value: £251.7m

PE: 13.7 EPS growth: 15.1%

Yield: 2.5% 3 mth rel str: 19.6%

Takeover potential: 2

No announcements from the company since September’s interims, which revealed the broker had only floated one business in the first half. Issues with regards to the quality of Evolution’s floats have been addressed but IPO market has significantly cooled since.

Shares view: Now HOLD Last Year SELL

IP Group (IPO) 91.3p

Market value: £230.3m

PE: 6.4 EPS growth:9.4%

Yield: n/a 3 mth rel str: -14.6%

Takeover potential: 1

It commercialises university intellectual property. While the directors were busy buying back in October, the shares have gone nowhere. The company is going to struggle realising investments given cooling IPO market.

Shares view: Now HOLD Last Year HOLD

Liontrust Asset Management (LIO) 294p

Market value: £98m

PE: 10.4 EPS growth: -7.5%

Yield: 5.3% 3 mth rel str: -8.4%

Takeover potential: 1

The fund manager has been struggling to grow assets under management (AUM). In line with the fall in the FTSE All Share, AUM are down 13% to £4.4 billion in the period between 31 December 2007 to 22 January 2008. Not encouraging.

Shares view: Now SELL Last Year HOLD

London Scottish Bank (LSB) 25.8p

Market value: £34.5m

PE: 2.9 EPS growth: n/a

Yield: 18.8% 3 mth rel str: -65%

Takeover potential: 2

The doorstep lender has been ordered by the Financial Services Authority (FSA) to increase its regulatory capital. In reaction to this the company has had to scale back its lending activities.

Shares view: Now HOLD Last Year BUY

Paragon (PAG) 79.3p

Market value: £81.8m

PE: 1.6 EPS growth: -47.8%

Yield: n/a 3 mth rel str: -63.8%

Takeover potential: 3

Caught out in the credit crunch, Paragon has had to go back to existing investors to raise money through a rights issue. Now the funding has been addressed, questions remain about the quality of buy-to-let loan book.

Shares view: Now HOLD Last Year HOLD

Prodesse (PRD) 420p

Market value: £117.7m

PE: 10.6 EPS growth: 13.6%

Yield: 9% 3 mth rel str: 10%

Takeover potential: 1

Uses cheap and secure sources of US funding (which will have got cheaper since Federal Reserve’s 75 basis point cut last week) to gear up and invest in US government-guarantee mortgage-backed securities.

Shares view: Now BUY Last Year HOLD

Rensburg Sheppards (RBG) 630.5p

Market value: £278m

PE: 9.3 EPS growth: 23.5%

Yield: 4.4% 3 mth rel str: -7.6%

Takeover potential: 2

The fund manager has not updated the market since November’s interims for the period ending 30 September, when it revealed healthy asset growth. With difficult equity markets, Rensburg will not be immune to the same trends affecting others in the sector.

Shares view: Now HOLD Last Year BUY

Shore Capital (SGR) 38.5p

Market value: £118.6m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -22.5%

Takeover potential: 2

A difficult floats market will not help the advisory side of the business. Meanwhile, worsening outlook for property is hitting asset management division, which has exposure to the German market.

Shares view: Now HOLD Last Year HOLD

General Industrials

by: Timon Day, Dan Coatsworth

British Polythene Industries

(BPI) 247p

Market value: £65.5m

PE: 7.3 EPS growth: -15%

Yield: n/a 3 mth rel str: -27.2%

Takeover potential: 2

Why bother? Over-geared, raw material prices rocketing and on environmentalists’ hate list. The shares halved since last year.

Shares view: Now SELL Last Year HOLD

RPC (RPC) 197p

Market value: £195m

PE: 8.8 EPS growth: -6.6%

Yield: 4.7% 3 mth rel str: -20.7

Takeover potential: 2

Dividend should be maintained, which supports share price. High gearing , low margins and cost pressures make a tricky combination.

Shares view: Now HOLD Last Year HOLD

General Retailers

by: John Marshall

Blacks Leisure (BSLA) 160p

Market value: £68.2m

PE: 16.5 EPS growth: 1467%

Yield:3% 3 mth rel str: -37.4%

Takeover potential: 3

The recent record has been appalling. Although profits are starting to recover they are still well down on those earned 3 years ago. The new CEO's strategy is not a quick fix. Sports Direct (SPD) has 29.3% stake.

Shares view: Now HOLD Last Year HOLD

Clinton Cards (CC.) 61.3p

Market value:£127m

PE: 9.5 EPS growth: 31.8%

Yield:4.5% 3 mth rel str: 1.7%

Takeover potential: 2

The company is beginning to recover from the disastrous acquisition of the Birthdays chain. Enjoyed modest sales growth over Christmas. Facing increased competition. Family unlikely to bid in current climate.

Shares view: Now HOLD Last Year HOLD

Dunelm (DNLM) 154p

Market value: £309m

PE: 9.7 EPS growth: 15.6%

Yield:3.6% 3 mth rel str: -19.5%

Takeover potential: 1

Company is dominated by the founding Adderley family. One of the better 2006 floats. Enjoyed good Christmas trading. Relatively defensive play. Using slowdown in rents as means of rapid expansion. Interesting company.

Shares view: Now BUY Last Year BUY

French Connection (FCCN) 98p

Market value: £94m

PE: 39.5 EPS growth:-25.6%

Yield:5.3% 3 mth rel str: -19.5%

Takeover potential: 4

The company has suffered several years of poor profits since the collapse of the FCUK advertising campaign. Chairman and founder Stephen Marks has 41.8% stake. Baugur stake adds speculative appeal.

Shares view: Now HOLD Last Year SELL

JJB Sports (JJB) 97.8p

Market value: £234m

PE: 9.0 EPS growth:- 26.6%

Yield:10.2% 3 mth rel str: -35.9%

Takeover potential: 4

The new CEO Chris Ronnie is revitalising the group. Should benefit from the difficulties of Sports Direct (SPD). Results will be hit by England's failure to qualify for Euro '08, while question marks remain over dividends.

Shares view: Now HOLD Last Year HOLD

The writer holds shares in this company

John David Group (JD.) 344p

Market value: £166m

PE: 7.9 EPS growth: 30.2%

Yield:2.2% 3 mth rel str: -12.3%

Takeover potential: 3

The unquoted Pentland Group owns 57%. Sports Direct (SPD) has 11.1%. Will Pentland bid or sell on its stake? Christmas trading was very strong. Well managed company. Limited liquidity has restricted institutional interest.

Shares view: Now BUY Last Year BUY

Land of Leather (LAN) 59.3p

Market value: £29.7m

PE: 6.1 EPS growth: -63.2%

Yield:15.6% 3 mth rel str: -70.9%

Takeover potential: 1

The group is suffering from the downturn in consumer confidence which always hits the furniture trade especially hard. Is suffering miserable trading. Directors have been buying shares. Balance Sheet OK.

Shares view: Now HOLD Last Year HOLD

Laura Ashley (ALY) 25p

Market value: £183m

PE: 17.2 EPS growth: 36.7%

Yield:4.4% 3 mth rel str: 4.3%

Takeover potential: 4

After several disappointing years in the 1990s the group is now strongly on the recovery path.The company is effectively under Malaysian control. Will they ever bid? Well regarded management team.

Shares view: Now BUY Last Year BUY

Lookers (LOOK) 87p

Market value: £158m

PE: 9 EPS growth:-7.1%

Yield:4.5% 3 mth rel str:-40.1%

Takeover potential: 1

The industry has warned that the car market is likely to be 'challenging' this year. Although company is trading more successfully than Pendragon (PDG), shares likely to be an unexciting market in short term.

Shares view: Now HOLD Last Year BUY

Mothercare (MTC) 337p

Market value: £294m

PE: 13.4 EPS growth: 12%

Yield: 3.2% 3 mth rel str: -5%

Takeover potential: 2

Company is enjoying stronger trading than many retailers. CEO Ben Gordon has strengthened the business. International expansion should boost EPS as will the acquisition of Early Learning Centre.

Shares view: Now BUY Last Year HOLD

The writer holds shares in this company

Nord Anglia Education (NAE) 236p

Market value: £94.1m

PE: 13.5 EPS growth: 44.4%

Yield: n/a 3 mth rel str: -32%

Takeover potential: 3

Sale of the nursery school division at substantial book loss frees company to concentrate upon stronger growth markets. Its International Schools division should generate good medium-term growth. Will 26.4% shareholder Principle return with another bid?

Shares view: Now BUY Last Year BUY

Pendragon (PDG) 31p

Market value: £204m

PE: 8.7 EPS growth: -51.8%

Yield:12.9% 3 mth rel str: -46.5%

Takeover potential: 1

The company has been very badly affected by the downturn in the car market. The integration of Vardy seems to have been less happy than hoped. Immediate outlook poor. Heavily borrowed.

Shares view: Now HOLD Last Year BUY

Ted Baker (TBK) 507p

Market value: £213m

PE: 14.1 EPS growth: 6.2%

Yield: 3.2% 3 mth rel str: 3.8%

Takeover potential: 1

The group's quirky marketing and its popularity with free-spending younger consumers have helped it avoid the worst of the downturn in consumer confidence. Founder Ray Kelvin has 39% stake. Takeover unlikely.

Shares view: Now HOLD Last Year BUY

Topps Tiles (TPT) 136p

Market value: £232m

PE: 8.1 EPS growth: 9.2%

Yield:8.6% 3 mth rel str: -26.3%

Takeover potential: 3

Group dominates the growing ceramic tile market. Has succeeded at least so far in weathering downturn in consumer confidence. Low shares price could attract a bid. High - but secure - yield.

Shares view: Now BUY Last Year BUY

The writer holds shares in this company

Woolworths (WLW) 8.8p

Market value: £128m

PE: 6.9 EPS growth: 198%

Yield:11.9% 3 mth rel str:-47.1%

Takeover potential: 4

How the mighty are fallen! Analysts expect group to cut the divi. Competition is too severe for the company. Baugur has 10% stake. Any bid would be at small premium as investors are disillusioned.

Shares view: Now SELL Last Year SELL

Health Care Equipment & Services

by: Rachel Robson

Care UK (CUK) 385p

Market value: £216.9m

PE: 14.4 EPS growth: 26.8%

Yield: 1.1% 3 mth rel str: -27.8%

Takeover potential:2

Although shares have fallen due to delay on financial close of projects and termination of a contract, contract wins overall have been plentiful. There are many further acquisition opportunities in the pipeline for 2008 and outlook is promising.

Shares view: Now BUY Last Year HOLD

Consort Medical (CSRT) 581p

Market value: £165.8m

PE: 13.7 EPS growth: -5.3%

Yield: 3.3% 3 mth rel str: -6.7%

Takeover potential: 4

Previously known as Bespak, Consort is restructuring its Inhaled Drug Delivery business after Pfizer exited Exubera inhaled insulin, following reduction in production levels. Talks over a possible offer for the group were terminated in November.

Shares view: Now HOLD Last Year HOLD

Corin (CRG) 515p

Market value: £215.8m

PE: 19.1 EPS growth: 66.8%

Yield: 0.3% 3 mth rel str: -5.3%

Takeover potential: 4

Received FDA approval to market its hip resurfacing device, Cormet, in the US, back in July. Shipments to its US distribution partner, Stryker, have begun. Growing demand and ongoing new product flow mean the group remains potential takeover target.

Shares view: Now BUY Last Year BUY

Optos (OPTS) 117p

Market value: £80.6m

PE: 116 EPS growth: n/a

Yield: n/a 3 mth rel str: -34.8%

Takeover potential: 2

Has expanded product range into the secondary care market with launch of optomap plus Medical Retinal Exam. North America continues to present largest opportunity for sustained growth within primary care customer segment. Should soon become profitable.

Shares view: Now HOLD Last Year HOLD

Whatman (WHM) 247.3p

Market value: £326.9m

PE: 17.5 EPS growth: -2.2%

Yield: 2.3% rel str: 37.5%

Takeover potential: 3

Weaker US dollar and manufacturing issues have held back its performance. However, good progress is being made with its restructuring programme and its order book is improving. Recent bid approaches could see Whatman taken over this year.

Shares view: Now HOLD Last Year HOLD

Household Goods

by: John Marshall

McBride (MCB) 92p

Market value: £166m

PE: 7.8 EPS growth: -8.4%

Yield:6.5% 3 mth rel str: -47%

Takeover potential: 4

The specialist in own-label detergents and personal care products has been badly affected by higher raw material prices. Recent acquisitions performing in line with expectations. Bidders could return following massive underperformance.

Shares view: Now HOLD Last Year BUY

Norcros (NXR) 53.8p

Market value: £79.9m

PE: 6.9 EPS growth: 34.2%

Yield: 6% 3 mth rel str: -12.7%

Takeover potential: 2

One of 2007's disappointing floats. The shares were placed at 78p in August but have suffered from group's commitment to the building sector. It is the brand leader in tiles and has significant presence in showers. Immediate outlook challenging but the yield's attractive.

Shares view: Now HOLD Last Year n/a

Industrial Engineering

by: Timon Day

Castings (CGS) 264p

Market value: £115m

PE: 10.7 EPS growth: 8%

Yield: 3.8% 3 mth rel str: -0.3%

Takeover potential: 2

A pretty solid record over the years, but UK and European demand for iron castings does not look a growth sector. The shares have done well over the past few years, but this run could be coming to an end.

Shares View: Now SELL Last Year HOLD

Fenner (FENR) 230p

Market value: £364m

PE: 13 EPS growth: 8.2%

Yield: 3% 3 mth rel str: -5.2%

Takeover potential: 3

Fenner is now the world’s leading maker of heavy-duty conveyor belting for mining and processing companies. It is also continuing to increase its market share and pricing. But half its sales are in America, which could prove a problem.

Shares view: Now HOLD Last Year BUY

Hill & Smith (HILS) 312p

Market value: £236m

PE: 11 EPS growth: 27.7%

Yield: 3.1% 3 mth rel str: -12%

Takeover potential: 2

Tipped as a play of the week last year, it has just been stopped out. A sharp slowdown looks likely as government spending on infrastructure projects could be cut due to budget constraints.

Shares view: Now HOLD Last Year BUY

Manganese Bronze (MNGS) 567p

Market value: £142m

PE: 38.6 EPS growth: 255%

Yield: 1.3% 3 mth rel str: -18.4%

Takeover potential: 2

Avid readers will not be surprised at the share price fall after our words of warning last year. Profit projections could be pie-in-the-sky if the Chinese venture fails to blossom. On this rating its black cabs must be made of gold.

Shares view: Now SELL Last Year HOLD

Melrose (MRO) 137p

Market value: £182m

PE: 9.4 EPS growth: 21.7%

Yield: 4.6% 3 mth rel str: -21.1%

Takeover potential: 3

It’s much easier buying businesses, turning them round and flogging ’em when the economy is booming. But the hot-shot management is always worth backing.

Shares view: Now HOLD Last Year HOLD

Senior (SNR) 99p

Market value: £388m

PE: 12.3 EPS growth: 62%

Yield: 2.4% 3 mth rel str: -11%

Takeover potential: 2

Following the purchase of Capo the company could be reclassified as an aerospace outfit at some stage, as it now accounts for around 75% of sales. Earnings will rocket for 2007 but look like rising only around 12% for 2008.

Shares view: Now HOLD Last Year BUY

Vitec (VTC) 517p

Market value: £217m

PE: 10.2 EPS growth: 33.5%

Yield: 3.7% 3 mth rel str: -8.4%

Takeover potential: 3

A leading manufacturer of broadcast systems and imaging equipment that has fallen to its lowest rating for many years. The profit momentum is enough to secure a bumper 2007 and there should be sufficient momentum to see another increase this year.

Shares view: Now HOLD Last Year BUY

Industrial Transportation

by: Rachel Robson

Braemar Shipping Services (BMS) 445p

Market value: £91.6m

PE: 10.3 EPS growth: 12.7%

Yield: 4.5% 3 mth rel str: 16.3%

Takeover potential: 3

Enjoying solid trading despite weaker US dollar. Deep-sea tanker chartering freight rates have recovered rapidly after quiet summer/autumn and dry bulk rates have remained at historically high levels. Forward order book is healthy.

Shares view: Now BUY Last Year BUY

Business Post (BPG) 231p

Market value: £126.m

PE: 11.1 EPS growth: 29.4%

Yield: 7.4% 3 mth rel str: -32.7%

Takeover potential: 4

Has won some big new customers such as Abbey, HBOS (HBOS) and Virgin Media, and chief executive Guy Buswell has big plans for the company. Making good progress with integrating its businesses.

Shares view: Now BUY Last Year HOLD

Clarkson (CKN) 900p

Market value: £168.2m

PE: 8.4 EPS growth: 10.5%

Yield: 4.7% 3 mth rel str: 2.2%

Takeover potential: 3

Has set aside £6 million against a litigation claim, but profit for full year ending December 2007 is expected to be in line with expectations. Shipping market has remained strong. Continues to make acquisitions to strengthen and expand its business.

Shares view: Now HOLD Last Year HOLD

Fisher (James) & Sons (FSJ) 585p

Market value: £291.3m

PE: 14.7 EPS growth: 14.8%

Yield: 2% 3 mth rel str: -3.5%

Takeover potential: 3

Made several acquisitions and all businesses are integrating well. Further acquisitions are likely and trading remains healthy. The three marine support services divisions have enjoyed strong organic growth and profits have ticked up.

Shares view: Now BUY Last Year BUY

GoldenPort (GPRT) 352p

Market value: £246m

PE: 6 EPS growth: n/a

Yield: 5.4% 3 mth rel str: -20.8%

Takeover potential: 3

Owns and operates a fleet of dry bulk and container vessels. Dry bulk market has recovered and the container market is improving. Has successfully expanded its fleet and further expansion is expected.

Shares view: Now HOLD Last Year HOLD

Stobart (STOB) 128p

Market value: £205.6m

PE: 18.1 EPS growth: 74.6%

Yield: 6.3% 3 mth rel str: n/a

Takeover potential:3

Last September Westbury Property Fund merged with Eddie Stobart Holdings (Stobart Group) to bring together Stobart's contract logistic operations with Westbury's emerging multi modal port and rail operations. Business growing strongly, and new business being won.

Shares view: Now HOLD Last Year n/a

TDG (TDG) 181p

Market value: £145.5m

PE: 12.2 EPS growth: 9.5%

Yield: 7.8% 3 mth rel str: -19.1%

Takeover potential: 3

Undergone divisional reorganisation, creating Chemicals division and Contract Logistics division. Has won new business and renewed contracts and is trading in line with expectations. But shares have put in a dire performance in challenging environment.

Shares view: Now SELL Last Year SELL

Life Insurance

by: Carlo Svaluto

Chesnara (CSN) 166.5p

Market value: £174m

PE: 17.1 EPS growth: -4.7%

Yield: 8.6% 3 mth rel str: 6%

Takeover potential: 2

The latest interims in September were positive, thanks to lower mortgage endowment complaints. The company is looking for acquisitions, and said that if no opportunities are found it will release cash to shareholders.

Shares view: Now BUY Last Year HOLD

Hansard Global (HSD) 213.50p

Market value: £296.5m

PE: 7.4 EPS growth: n/a

Yield: 6.2% 3 mth rel str: n/a

Takeover potential: 3

New business figures last November were positive for the long-term savings provider. Growth in the Far East, Scandinavia and Latin America has been strong. The interims in February should not miss the City's attention.

Shares view: Now HOLD Last Year n/a

Media

by: Susanna Twidale

Bloomsbury Publishing (BMY) 157p

Market value: £116m

PE: 17.6 EPS growth: -75.4%

Yield: 2.62% 3 mth rel str: 19.4%

Takeover potential: 2

Shares have been buoyed recently by a positive trading statement saying 2007 finals will beat expectations, leading to some upgrades. The end of the Potter franchise is now priced in.

Shares view: Now HOLD Last Year HOLD

Centaur Media (CAU) 89.3p

Market value: £128m

PE: 9.13 EPS growth: 27.9%

Yield: 4.56 % 3 mth rel str: -9.5%

Takeover potential: 3

Shares plummeted last year like many in the sector but they have been steadied by a recent trading statement saying it expects double digit profits growth in 1H. A share buyback should also underpin the price which looks cheap.

Shares view: Now BUY Last Year HOLD

Chime Communications (CHW) 29p

Market value: £77.2m

PE: 6.34 EPS growth: 63.9%

Yield: n/a 3 mth rel str: -29.1%

Takeover potential: 2

Predicted results would be at the top end of forecasts in December but this hasn't stopped shares plummeting. Its balance sheet is virtually ungeared however, a big plus in this climate.

Shares view: Now HOLD Last Year HOLD

Chrysalis (CHS) 109p

Market value: £73m

PE: 123 EPS growth: n/a

Yield: 0.49% 3 mth rel str: -51.6%

Takeover potential: 4

Its radio business was sold last year but the music publishing arm still looks attractive to other potential suitors, especially with its share price at these lows. Trading conditions remain tough though and look unlikely to improve in the short term.

Shares view: Now HOLD Last Year SELL

Entertainment Rights (ERT) 8.1p

Market value: £59.3m

PE: 5.8 EPS growth: 3.4%

Yield: n/a 3 mth rel str: -56.1%

Takeover potential: 5

A sales shortfall means the company will fail to meet its full year targets. The subsequent share dip, however, has made it a target for private equity and the chances of a takeout this year look very high.

Shares view: Now HOLD Last Year BUY

Future (FUTR) 37p

Market value: £121m

PE: 12.2 EPS growth: -52.1%

Yield: 3.49% 3 mth rel str: -5.7%

Takeover potential: 2

Is in the process off a turnaround and moved back into the black last year. The hobbyist nature of many of its titles means it has loyal readers and that sales should hold up, but there is still work to do.

Shares view: Now HOLD Last Year SELL

GCAP Media (GCAP) 182p

Market value: £300m

PE: 34 EPS growth: n/a

Yield: 2.6% 3 mth rel str: 15.9%

Takeover potential: 5

The sale of its Century radio stations reduced debts but they still stand around £37 million. Recently rejected a bid worth £313 million from Global Radio, which is expected to come back with a higher offer.

Shares view: Now HOLD Last Year SELL

Huntsworth (HNT) 70.5p

Market value: £148m

PE: 8.2 EPS growth: -18.4%

Yield: 3.19% 3 mth rel str: -19.3%

Takeover potential: 2

The PR company expects to meet 2007 targets and is confident for prospects about 2008 with solid new business wins. It is looking to sell its weak US business Broad Street which should help but it has net debts around £52.7 million.

Shares view: Now HOLD Last Year BUY

Pinewood Shepperton (PWS) 217p

Market value: £99.2m

PE: 21.6 EPS growth: 109%

Yield: 1.39% 3 mth rel str: -12%

Takeover potential: 2

The US writers strike is weighing heavily on the company with revenues expected to be hit by around £3 million in 2008. It is still going ahead with plans to almost double the size of its studio capacity which will cost around £200m

Shares view: Now HOLD Last Year BUY

SMG (SMG) 15p

Market value: £143m

PE: 11.7 EPS growth: -40%

Yield: 8% 3 mth rel str: -34%

Takeover potential: 3

A £95 million rights issue and plans to sell Virgin Radio should steady the ship. Potential bidders include Global Radio which is also after Gcap, and any extra proceeds should be returned to shareholders.

Shares view: Now HOLD Last Year HOLD

Tarsus (TRS) 202p

Market value: £123m

PE: 17.5 EPS growth: 12.9%

Yield: 2.75 % 3 mth rel str: 9.7%

Takeover potential: 2

A recent trading update suggests full year results will be at the top end of expectations. More growth is expected in 2008 but the move of its major Labelexpo show to the US means it will be more dollar exposed this year.

Shares view: Now HOLD Last Year BUY

UTV Media (UTV) 226p

Market value: £130m

PE: 8.24 EPS growth: -16.4%

Yield: 6.32% 3 mth rel str: -20%

Takeover potential: 2

A share placing at 200p raised £5.48m in December and made several small acquisitions last year. It could also be a bidder for Virgin Radio which would be a good fit for the company at the right price.

Shares view: Now HOLD Last Year HOLD

Wilmington (WIL) 195p

Market value: £162m

PE: 12.3 EPS growth: -7.76%

Yield: 3.52% 3 mth rel str: -9.7%

Takeover potential: 3

Its mandatory legal training division provides protection against any downturn in its B2B revenues. A share buyback programme should also help to underpin the price this year and bids cannot be ruled out.

Shares view: Now HOLD Last Year HOLD

Mining

by: Dan Coatsworth

Anglo Pacific (APF) 161p

Market value: £170m

PE: 8.4 EPS growth: 34.6%

Yield: 4% 3 mth rel str: 2.5%

Takeover potential: 2

One of the lucky stocks not to have seen its share price dip in H2, 2007. Anglo is effectively an investment company, picking up royalties from mining projects. With at least another year's strong commodity prices forecast, this continues to be attractive.

Shares view: Now BUY Last Year BUY

Central Rand Gold (CRND) 104p

Market value: £256.5m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: n/a

Takeover potential: 2

Floated in late 2007, CRG is trying to reopen a large gold mine in South Africa with production set for 2010. The following year, it hopes to be producing one million ounces of gold annually. There are development and financing risks, but strong institutional support bodes well.

Shares view: Now BUY Last Year n/a

Nonlife Insurance

by Carlo Svaluto

Chaucer Holdings (CHU) 96p

Market value: £331.4m

PE: 7 EPS growth: 451%

Yield: 5% 3 mth rel str: 1.1%

Takeover potential: 3

The insurer released impressive interim results last September and was upbeat about 2008 despite softer premiums. The board said it will raise the 2007 final dividend by 25%, and a new Lloyd’s syndicate has received approval.

Shares view: Now BUY Last Year HOLD

Hardy Underwriting (HDU) 260p

Market value: £92m

PE: 6.3 EPS growth: 76.2%

Yield: n/a 3 mth rel str: -5.2%

Takeover potential: 4

The group’s recent move to Bermuda opens new opportunities. Competitions for certain classes of business is strong but the company said margins are acceptable. Expect bid speculation to prompt share price volatility.

Shares view: Now BUY Last Year HOLD

Highway Insurance (HWY) 69p

Market value: £141m

PE: 7.4 EPS growth: -30.4%

Yield: 8.6% 3 mth rel str: -1%

Takeover potential: 3

The group said last September that there was some evidence of premium price increases in the fiercely competitive motor insurance market. This should have a positive impact on the-full year results and inject confidence.

Shares view: Now BUY Last Year HOLD

Kiln (KIN) 147.5p

Market value: £430m

PE: 8.1 EPS growth: 447%

Yield: 3.4% 3 mth rel str: 66.4%

Takeover potential: n/a

Business was good in 2007 for the Lloyd’s insurer, which last December recommended a 150p-a-share offer from Japanese insurer Tokyo Marine, seeing it top the list of Small Cap risers.

Shares view: Now HOLD Last Year HOLD

Novae (NVA) 32.25p

Market value: £236.14m

PE: 10.6 EPS growth: n/a

Yield: 3.4% 3 mth rel str: -3.7%

Takeover potential: 3

The insurer returned to profit last year, but the classes of business in which it operates are still seeing premium rate reductions, and they should not start picking up until the end of the year.

Shares view: Now HOLD Last Year BUY

Oil & Gas Producers

by: Tom Sieber

Emerald Energy (EEN) 194p

Market value: £115m

PE: 82.7 EPS growth: -20%

Yield: n/a 3 mth rel str: 14.1%

Takeover potential: 4

Recent successful appraisal drilling at the Khubert East discovery in Syria helped push these up and broker Evolution Securities says the stock is at a discount to its NAV.

Shares view: Now BUY Last Year HOLD

Fortune Oil (FTO) 7.13p

Market value: £131m

PE: 25.5 EPS growth: 16.7%

Yield: n/a 3 mth rel str: 34.5%

Takeover potential: 2

Last year Fortune became the first foreign company to partner the Chinese authorities in a coal bed methane (CBM) project. As CBM receives preferential treatment over conventional gas supply in the country this could support growth.

Shares view: Now HOLD Last Year HOLD

Melrose Resources (MRS) 325p

Market value: £358m

PE: 14.5 EPS growth: n/a

Yield: 0.54 3 mth rel str: 14.5%

Takeover potential: 4

A pretty dire 2007 for Melrose with the company swinging to a £17 million loss on unsuccessful drilling offshore Bulgaria. The focus now is on Egypt with 14 exploration wells planned for 2008.

Shares view: Now HOLD Last Year BUY

Salamander Energy (SMDR) 255p

Market value: £226m

PE: 34.7 EPS growth: 8.7%

Yield: n/a 3 mth rel str: 13.5%

Takeover potential: 2

In a recent update Merrill Lynch issued a 'buy' rating on the stock estimating that last year's acquisition of GFI adds 40p to the firm's NAV. With a 17-well drilling programme planned for the next two years the prospects look good for 2008.

Shares view: Now BUY Last Year n/a

Personal Goods

by: John Marshall

UMBRO (UMB) 186p

Market value: £272m

PE: 17.8 EPS growth: -21.45

Yield: 3.2% 3 mth rel str: 70%

Takeover potential: 5

The group is the subject of an agreed bid from Nike at 195p. This has been cleared by the competition authorities. Accept the bid.

Shares view: Now SELL Last Year BUY

Pharmaceuticals & Biotechnology

by: Susanna Twidale

Acambis (ACM) 120p

Market value: £129m

PE:n/a EPS growth: n/a

Yield: n/a 3 mth rel str: 4.8%

Takeover potential: 3

The biotech has lots of newsflow due this year, which could lift shares. Another smallpox vaccine deal with the US government is on the cards and data is due from its trials for Japanese encephalitis and dengue fever vaccines.

Shares view: Now HOLD Last Year HOLD

Alizyme (AZM) 42p

Market value: £84.4m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -40.7%

Takeover potential: 2

Results from Phase III studies for its IBS drug Renzapride, and ulcerative colitis products are due in the first half of the year. Looks cheap, and positive news and potential licensing deals could lead to a recovery in shares.

Shares view: Now BUY Last Year BUY

Antisoma (ASM) 23.5p

Market value: £105m

PE: 18.1 EPS growth: n/a

Yield: n/a 3 mth rel str: -13.4%

Takeover potential: 3

Has a deal with Novartis for its lung cancer treatment ASA404, which should start Phase III trials this year and could be worth up to $890 million. It had over £60 million in cash t the last count, which puts it in good stead to succeed.

Shares view: Now BUY Last Year BUY

Ark Therapeutics (AKT) 79.8p

Market value: £164m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -21.4%

Takeover potential: 2

Has three products already on the market and three other major products in development. Cancer treatment-related muscle-wasting treatment Vitor is set to enter Phase III trials this year, while brain cancer product Cerepro will also report some Phase III data.

Shares view: Now HOLD Last Year BUY

Axis-Shield (ASD) 243p

Market value: £119m

PE: 17.7 EPS growth: 2.1%

Yield: n/a 3 mth rel str: -4.1%

Takeover potential: 2

The diagnostic test maker says its 2007 trading will be in line with expectations, although it is highly exposed to the dollar. The uptake of its Afinion kits and its ability to launch new tests will be crucial this year.

Shares view: Now HOLD Last Year HOLD

BTG (BGC) 94.3p

Market value: £142m

PE: 163 EPS growth: n/a

Yield: n/a 3 mth rel str: 0.8%

Takeover potential: 2

Has a number of products already on the market. Phase II safety data for its varicose vein product Varisolve is due this year and a positive result would buoy shares. Sleep apnoea and head lice products are also due to report data.

Shares view: Now HOLD Last Year HOLD

Dechra Pharmaceuticals (DPH) 335p

Market value: £217m

PE: 15.9 EPS growth: 16%

Yield: 2.88% 3 mth rel str: -3.6%

Takeover potential: 2

It recently raised £35 million through an open offer to help fund the acquisition of Danish veterinary group VetXX Holdings, which it expects to be earnings-enhancing from the off. Trading is in line with expectations.

Shares view: Now HOLD Last Year HOLD

Genus (GNS) 740p

Market value: £438m

PE: 21 EPS growth: n/a

Yield: 1.43% 3 mth rel str: 16.3%

Takeover potential: 2

Recently sold its Animalcare division for £14 million to help reduce debts. Sales have been strong in the first quarter despite the weaker dollar, although it says there is some uncertainty in the European markets.

Shares view: Now HOLD Last Year HOLD

GoldShield (GSD) 273p

Market value: £105m

PE: 8.56 EPS growth: 25.2%

Yield: 2.87% 3 mth rel str: 23.5%

Takeover potential: 1

Swing into profits at its interim results with sales in its pharma division soaring. The investigation by the Serious Fraud Squad into price-fixing allegations is still ongoing, as is the search for a new FD.

Shares view: Now HOLD Last Year HOLD

Oxford Biomedica (OXB) 21.3p

Market value: £114m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -19.7%

Takeover potential: 3

Is developing several promising cancer treatments, with Phase III trials for its high-risk acute leukemia product poised to start after its partner gained approval. The company is never far from takeover rumours, especially at these lows.

Shares view: Now HOLD Last Year BUY

ProStrakan (PSK) 64.5p

Market value: £130m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: 7.5%

Takeover potential: 2

Has £24 million cash and a £30 million debt facility, which is forecast to see it through to profitability in 2010. It should get a regulatory decision on its patch to help cancer treatment-related vomiting this year which, if positive, would lead to a launch and share uplift.

Shares view: Now BUY Last Year HOLD

Protherics (PTI) 51.75p

Market value: £173m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: 23.6%

Takeover potential: 3

Partner AstraZeneca has just started human Phase II trials for its severe sepsis product CytoFab, which is a part of the £195 million licensing deal it signed in 2005. It has several other potential catalysts this year – currently looks cheap.

Shares view: Now BUY Last Year HOLD

Renovo (RNVO) 146p

Market value: £277m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -17.4%

Takeover potential: 3

It already has a licensing deal with Shire for its ant-scaring product Juvista, which should enter Phase III trials this year. Has a healthy cash balance of £100.7 million, which it says will last for three years

Shares view: Now HOLD Last Year HOLD

SkyePharma (SKP) 12.8p

Market value: £104m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -3.7%

Takeover potential: 2

The drug delivery company has agreements with all the majors but still suffers from negative sentiment after years of disappointment. Could be a pivotal year, and the progress of asthma product Flutiform will be crucial

Shares view: Now HOLD Last Year SELL

Vectura (VEC) 48.5p

Market value: £155m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -20.3%

Takeover Potential: 3

The lung and neurological disease company has collaborations with Novartis and Boehringer Ingelheim netting it milestone payments, which should lead to a £75 million cash pile at year end. Operating in lucrative markets and looks undervalued.

Shares view: Now BUY Last Year BUY

Real Estate

by: Rachel Robson

AlPha Pyrenees (ALPH) 81.3p

Market value: £103.2m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: n/a

Takeover potential: 2

Invests in Spanish and French property, focusing on commercial property in the industrial, logistics, office and retail sectors. Has made several acquisitions and with a solid pipeline of property investment opportunities, more of the same is expected.

Shares view: Now HOLD Last Year n/a

Assura (AGR) 137.5p

Market value: £323.4m

PE: 10.4 EPS growth: 50.2%

Yield: 5.5% 3 mth rel str: -25.2%

Takeover potential: 2

Medical division has entered into several JVs with GPs, while pharmacy division is increasing the number of branches and expects to have have at least 25 open by the end of March 2008 and at least 40 by the end of 2008.

Shares view: Now HOLD Last Year HOLD

CLS (CLI) 320.3p

Market value: £221.9m

PE: 15.1 EPS growth: 31.7%

Yield: n/a 3 mth rel str: -31.3%

Takeover potential: 2

Made several acquisitions across Europe and increased its stake in Bulgarian Land Development (BLD:AIM) to 28.7%. Secure income stream thanks to a diverse portfolio and plans to redevelop certain UK properties are expected to add value.

Shares view: Now HOLD Last Year HOLD

Development Securities (DSC) 430p

Market value: £174.4m

PE: 6.5 EPS growth: 298%

Yield: 1.7% 3 mth rel str: -7.4%

Takeover potential: 2

Continues to expand joint ventures, making progress with new relationships and on existing projects. Entered into a £15 million revolving five-year funding agreement with Fiducia Group. However, profits have suffered on back of market turmoil.

Shares view: Now HOLD Last Year BUY

DTZ (DTZ) 240p

Market value: £142.6m

PE: 6.9 EPS growth: -33.3%

Yield: 5.2% 3 mth rel str: -44.8%

Takeover potential: 2

Shares have plunged on back of difficult market conditions, particularly in UK and US, and full year results will be impacted. A better performance has been seen in its capital markets business in Continental Europe and Asia Pacific.

Shares view: Now SELL Last Year BUY

Helical Bar (HLCL) 335p

Market value: £319.2m

PE: 15.4 EPS growth: n/a

Yield: n/a 3 mth rel str: -23.9%

Takeover potential: 2

Built up exposure to a range of projects in a bid to reduce impact of cyclical market falls. Entered into JV with UK Coal (UKC) to develop government office campus. But has not remained immune from impact of credit crunch.

Shares view: Now HOLD Last Year BUY

Local Shopping Reit (LSR) 101.5p

Market value: £94.3m

PE: -5.1 EPS growth: n/a

Yield: n/a 3 mth rel str: -13.6%

Takeover potential:2

Only newly formed Reit to float in 2007, when it raised £160 million. Focuses on investments in local shopping assets in the UK and has increased its portfolio to 632 properties. Believes market uncertainty will provide acquisition opportunities.

Shares view: Now HOLD Last Year n/a

London & Assoc Properties (LAS) 82.8p

Market value: £63m

PE: 22.1 EPS growth: n/a

Yield: n/a 3 mth rel str: -13.3%

Takeover potential: 3

Shopping centre and property specialist has made several acquisitions and disposals and this trend is set to continue. Strong cash position sets it in good stead and properties in its portfolio hold good growth prospects.

Shares view: Now HOLD Last Year HOLD

Marylebone Warwick Balfour (MWB) 180p

Market value: £144.9m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -26.7%

Takeover potential: 4

Sale of Malmaison group, which includes Hotel du Vin, has been delayed after Vector Hospitality failed to float and complete acquisition last year. However, Malmaison has continued to trade well, with several new openings across UK and more expected this year.

Shares view: Now BUY Last Year BUY

McKay Securities (MCKS) 296.5p

Market value: £135.8m

PE: 5.3 EPS growth: n/a

Yield: n/a 3 mth rel str: 7%

Takeover potential: 2

Slipped into the red at its half year results due to a 3.8% reduction in the book value of the group's property portfolio. However, its dividend ticked up nicely. Became a Reit on April Fools' Day.

Shares view: Now HOLD Last Year HOLD

Minerva (MNR) 149p

Market value: £240.2m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -23.9%

Takeover potential: 5

City of London office and high-end London residential markets remain robust, and Minerva's City of London developments are progressing well. Rumours of a possible takeover are circulating the market.

Shares view: Now HOLD Last Year HOLD

Mucklow (A&J) (MKLW) 282.3p

Market value: £169.3m

PE: 14.9 EPS growth: -23.1%

Yield: 6.6% 3 mth rel str: -8.4%

Takeover potential: 2

Most of the group's properties are modern, in prime locations, and provide steady rental and capital growth. Occupancy levels have been maintained around 93%. But shares have taken a beating.

Shares view: Now HOLD Last Year SELL

Primary Health Properties (PHP) 264p

Market value: £88.7m

PE: 18.4 EPS growth: n/a

Yield: 5.4% 3 mth rel str: -12.3%

Takeover potential: 3

The Reit is expanding well and investor and tenant demand for modern primary health care facilities remain high. Future growth will mostly be driven by further rental increases from the portfolio. Divi ticking up nicely.

Shares view: Now HOLD Last Year BUY

Safestore (SAFE) 143p

Market value: £267.5m

PE: 15.4 EPS growth: n/a

Yield: 3.1% 3 mth rel str: -9%

Takeover potential: 3

Floated in May 2007. Although shares have fallen, Safestore has good growth prospects thanks to increased demand for self-storage facilities. Its pipeline of new stores continues to grow, but faces competition from Big Yellow (BYG) and Lok'nStore (LOK:AIM).

Shares view: Now BUY Last Year n/a

Town Centre Securities (TSCS) 340p

Market value: £180.7m

PE: 23 EPS growth: -66.1%

Yield: 2.4% 3 mth rel str: -4.4%

Takeover potential: 2

Continued to invest in refurbishment of its assets and acquire new sites. However, the group admits that recent liquidity concerns and volatility in interest rates add to challenges for its core tenants in the retailer community.

Shares view: Now HOLD Last Year HOLD

Warner Estate (WNER) 337p

Market value: £188.5m

PE: 8.4 EPS growth: -60.4%

Yield: 7.2% 3 mth rel str: -30%

Takeover potential: 2

Interim results were nothing to get excited about, but the group will benefit from several long term banking relationships, including JVs with its banks. Continues to expand portfolio and completed 200,000 sq ft shopping centre in Folkestone in November.

Shares view: Now HOLD Last Year HOLD

Software & Computer Services

by: Russ Mould

Anite (AIE) 40p

Market value: £139m

PE: 7.8 EPS growth: 18%

Yield: 2.7% 3 mth rel str: -27.6%

Takeover potential: 4

A pair of profit warnings crushed the telecoms testing, travel and public sector software and services expert's share price in the autumn. But recent M&A activity in the sector, coupled with management hints that the group may finally be broken up, means the stock now looks cheap again.

Shares view: Now BUY Last Year HOLD

Axon (AXO) 438.25p

Market value: £276m

PE: 10.2 EPS growth: 14%

Yield: 1.2% 3 mth rel str: -39.0%

Takeover potential: 3

Business transformation consultant's shares halved in the second half of 2007, even though a trio of acquisitions forged a presence in the USA and November's trading statement was upbeat. Assuming forecasts hold, valuation no longer rich but impact of credit crunch remains hard to quantify.

Shares view: Now HOLD Last Year BUY

Computacenter (CCC) 149.25p

Market value: £233.9m

PE: 8.3 EPS growth: 11%

Yield: 5.1% 3 mth rel str: -13.3%

Takeover potential: 3

Value-added reseller of PCs and related kit could feel the impact of credit crunch on customer spending in 2008, especially in the UK. Weakness here would offset the benefits of the planned turnaround in France and Germany. Yield is attractive and has share buyback programme, too.

Shares view: Now HOLD Last Year HOLD

Detica (DCA) 210.25p

Market value: £243.3m

PE: 12.3 EPS growth: 21%

Yield: 2% 3 mth rel str: -24.1%

Takeover potential: 2

Credit crunch claimed an unlikely victim when the IT security consultant issued a shock profit warning in November, blaming a slowdown in spending at investment banking clients. Key US acquisition has bedded down after slow start and UK e-borders win highlights firm's strong positioning for long term.

Shares view: Now BUY Last Year BUY

Dicom (DCM) 141.75p

Market value: £126.4m

PE: 10.4 EPS growth: -10%

Yield: 1.7% 3 mth rel str: -8.7%

Takeover potential: 3

Pair of profit warnings drove the CEO out and shares to a four-year low in summer, but rebranding and simplification of its product portfolio, a restructuring programme and arrival of a new boss have steadied the ship.

Shares view: Now HOLD Last Year BUY

Emblaze (BLZ) 50p

Market value: £55.7m

PE: 22 EPS growth: n/a

Yield: n/a 3 mth rel str: -23.3%

Takeover potential: 1

A restructuring and purchase of 50.1% stake in Formula Systems (FORTY:NDQ) means Israeli telecoms services group effectively has exposure to nine tech firms, include Zone-IP (ZIP:AIM) and Orca Interactive (ORCA:AIM). Trades at reasonable discount to net asset value.

Shares view: Now HOLD Last Year HOLD\

Fidessa (FDSA) 701p

Market value: £242.3m

PE: 14.5 EPS growth: 22%

Yield: 2.6% 3 mth rel str: -23.1%

Takeover potential: 2

Known as royalblue until last May, the provider of software for brokers' and asset managers' trading systems had a bumper 2007, helped by the introduction of MiFID. But the shares have still plunged due to the impact of the credit crunch on client spending patterns.

Shares view: Now HOLD Last Year HOLD

Innovation Group (TIG) 30.25p

Market value: £194.5m

PE: 12.4 EPS growth: 26%

Yield: 1.3% 3 mth rel str: 8.4%

Takeover potential: 2

Provider of software and services to the insurance industry has robust recurring revenues, strong links with IBM (IBM:NYSE) and good cash flow. December's announcement of a surprise full year dividend suggests a more shareholder friendly approach, too.

Shares view: Now BUY Last Year HOLD

Intec Telecom (ITL) 38.25p

Market value: £116.9m

PE: 12.9 EPS growth: 25%

Yield: n/a 3 mth rel str: -9.1%

Takeover potential: 5

A new management team has the chance to change Intec's reputation for disappointing investors and M&A activity in the telecom billing arena shows Intec is very cheap if a turnaround can be effected.

Shares view: Now BUY Last Year BUY

Morse (MOR) 60p

Market value: £77.4m

PE: 8.2 EPS growth: 20%

Yield: 7% 3 mth rel str: -34%

Takeover potential: 3

Consultant's exposure to troubled financial services industry has hobbled sentiment and shares have done badly, despite summer's spin-off of cash consumptive Monitise (MONI:AIM) unit and net cash pile, which means fat yield looks secure.

Shares view: Now HOLD Last Year HOLD

NCC (NCC) 315p

Market value: £106m

PE: 14.7 EPS growth: 30.3%

Yield: 1.8% 3 mth rel str: -4.1%

Takeover potential: 2

Made the leap from Aim to the Main Market last year. Acquisitions in UK, US and Europe have boosted good organic progress at escrow solutions provider which is well placed to capitalise upon the fight against cybercrime.

Shares view: Now BUY Last Year BUY

Northgate Information Solutions (NIS) 93.25p

Market value: £543.1m

PE: 14.3 EPS growth: -6%

Yield: 1.1% 3 mth rel str: 41.3%

Takeover potential: 5

Agreed 95p per share bid from private equity firm KKR has bailed out investors after soaring debts and doubts about last June's Belgian acquisition, ARINSO, drove the shares down to a three-year low of just 59.5p in December.

Shares view: Now HOLD Last Year BUY

NSB Retail (NSB) 37.5p

Market value: £142.9m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: 85.1%

Takeover potential: 5

Shares in retail solutions provider initially leapt when chief executive Nikki Beckett quit in spring but then subsided again, only for a 38p per share cash offer from Epicor to save the day. Shares are due to delist 8 February.

Shares view: Now HOLD Last Year HOLD

Phoenix IT (PNX) 222p

Market value: £165.4m

PE: 7.2 EPS growth: 28%

Yield: 2.7% 3 mth rel str: -32.8%

Takeover potential: 3

Beat off private equity to win bid battle for ICM Computer in spring but shares in IT services firm have since slumped and chief executive has stepped aside. New team now has to integrate a series of deals and tackle any credit crunch-inspired weakness in financial services customer base.

Shares view: Now HOLD Last Year BUY

RM (RM.) 204p

Market value: £189.1m

PE: 15.2 EPS growth: -8%

Yield: 2.3% 3 mth rel str: 15%

Takeover potential: 2

Series of lucrative deals for software firm, most notably the Building Schools for Future (BSF) contract, mean profits from these projects will exceed bid costs in 2010 rather than 2011. Non-BSF operations remain stable and cash generative.

Shares view: Now BUY Last Year HOLD

SCI Entertainment (SEG) 59.25p

Market value: £51.7m

PE: n/a EPS growth: n/a

Yield: n/a 3 mth rel str: -80.4%

Takeover potential: 4

A failed takeover bid, profit warning and need for fresh funding forced out the video games developer's long-standing management team earlier this month. Strategic review underway and potential there but risky until financial position is much clearer.

Shares view: Now HOLD Last Year HOLD

SDL (SDL) 236p

Market value: £177m

PE: 13.2 EPS growth: 6%

Yield: n/a 3 mth rel str: -10.0%

Takeover potential: 2

A genuine leader in its field and excellent trading update earlier this month showed translation software and services firm has overcome the handicap of dollar weakness as acquisitions have nicely supplemented strong organic progress.

Shares view: Now BUY Last Year HOLD

Support Services

by: Dan Coatsworth

AEA Technology (AAT) 86p

Market value: £107m

PE: 10.7 EPS growth: 14.1%

Yield: n/a 3 mth rel str: -13.3%

Takeover potential: 3

The energy and climate change consultancy saw profit fall last year despite increasing turnover. It has repositioned itself as a green service group and is chasing opportunities in the waste management and air quality monitoring sectors.

Shares view: Now HOLD Last Year HOLD

BPP (BPP) 565p

Market value: £280m

PE: 17.5 EPS growth: 11.1%

Yield: 4.2% 3 mth rel str: 9.9%

Takeover potential: 4

The education and training group fought off a bid from Carter & Carter in 2007. The tables could soon turn as the predator is on the verge of going bust and BPP could snap up some bits on the cheap. Degree awarding powers awarded in September is a coup.

Shares view: Now BUY Last Year BUY

Brammer (BRAM) 174p

Market value: £91.7m

PE: 7.4 EPS growth: 12%

Yield: 4.7% 3 mth rel str: -27.7%

Takeover potential: 3

With shares close to a two-year low, the future looks patchy for the industrial services group. It has been acquiring in Eastern Europe and the UK at the cost of expanding debt. A strong second half raised earnings expectations but mixed sentiment is holding back the shares.

Shares view: Now SELL Last Year HOLD

Communisis (CMS) 61p

Market value: £84.5m

PE: 9 EPS growth: 29.9%

Yield: n/a 3 mth rel str: -15.9%

Takeover potential: 3

A drop in profit last year prompted the printing and marketing group to cut dividends. Competitive pricing isn't helping but the company says it is making progress with cross-selling services to existing customers.

Shares view: Now SELL Last Year SELL

Diploma (DPLM) 163p

Market value: £36.8m

PE: 10.