Stocks to watch in October


Everything seems to have gone well for Bellway, our fourth-biggest house builder, in the year to July. A recent trading update from chief executive John Watson indicated pre-tax profits would top the £100 million mark (£67.2 million last time) reflecting a 6.2% rise in the number of house sales on better margins and higher prices. Watson describes the market as 'resilient' with an order book now worth £441 million.

Bellway splashed out more than £300 million on expanding the land bank last year to lay the groundwork for more growth. Analysts look for profits of £120 million this year, but the market remains cautious.

We are still a long way from the boom times of 2007 when the company made a satisfying £234 million profit. We drew attention to the shares in this column when they were selling for 579.5p two years ago. At 805.5p there is scope for further progress.

James Halstead

Commercial flooring manufacturer James Halstead said at the end of July it is expecting another record set of results in October. The shares have risen almost 50% this year on the prospect of profits reaching £42.4 million against £38.5 million last time. Two thirds of Halstead's sales are overseas which helped it grow during the recession. The dividend record is impressive.

Last year, for the 35th consecutive year, the dividend was raised from 13.375p to 14.3p and this year another increase is in prospect after an 11% rise to 5p at the half-year stage.

Given the gloomy global background, the sales growth Halstead achieved at the half year in some of its markets was remarkable - 25% up in France and Scandinavia - and even the UK managed record sales.

Analysts expect further growth this year and profits of £44.6 million have been projected. The dividend, expected to be 15.7p for the year just ended, could reach 16.8p in the current year.

Imperial Innovations

Imperial Innovations listed on AIM in 2006 to become the first university-owned company in the UK with a stock market quote. Through its founders at Imperial College in London and its connections at other university research groups, it has spent millions backing new ideas to create 80 technology companies in healthcare, recycling, communications and electronics and has a further £100 million to invest.

The shares hit a peak of 550p at the start of 2011 but have since yo-yoed between 268p and 375p. They are hard to value objectively. The latest portfolio valuation is £117 million with net assets put at £225 million. So the current market value of £314 million looks optimistic. The market expects a modest rise in profits from £573,000 to £682,000 for the year just ended, but don't expect dividends any time soon.

Avanti Communications

Avanti Communications has been one of the darlings of Aim this year with the shares up from 241p to 393p on the back of growth hopes for its superfast broadband service using satellites.

Avanti founder and chief executive David Williams reckons satellite technology will cut broadband costs by 75%. A second satellite, with a third planned, has just been successfully launched to provide high-speed data capacity across Africa and the Middle East to dovetail with the first satellite now covering Europe.

Optimism about prospects abounds at broker Jefferies, which has set a target of 600p for the shares. The group is rapidly building a customer base of telecom companies that supply Avanti's services to a broad range of government, commercial and residential customers. Williams is targeting emerging markets for the bulk of his business and eventually expects to achieve a very sizeable export business.

Near term, the prospect is for a loss of £9.16 million for the year to June, with hopes for a small profit this year. M&G and Caledonia Investments hold more than 30% of the shares and so are looking for big rewards over the long term.


YouGov, the pollster and online market research outfit, is expected to deliver a dramatic increase in profits next month after chief executive Stephan Shakespeare confirmed in early August that his group had delivered a strong performance. Analysts are expecting a profit of around £5.825 million pre-tax against only £411,000 last time. In the current year profits might reach as much as £7 million.

The company fell into the red during the recession but is making a healthy recovery helped by success in overseas markets. The shares nearly hit 200p in 2008 but have been as low as 43.63p early this year. They now change hands at 75.5p and should continue to progress.