Office rental firm sees stock rocket 20%

By Graeme Dickson
Updated: 13:57 EDT, 23 March 2011

The FTSE 100 rose 164 points or almost three per cent since last Wednesday to close yesterday at 5762.

This was down to relief that the end of the nuclear catastrophe in northern Japan seems to be in sight, while the prospects for reconstructing the affected regions started to get factored into base metal prices after heavy falls the previous week.

The blue chip index was up 97 points last Thursday ahead of a Group of Seven meeting amongst its finance ministers to discuss Japan's economy and the plight of financial markets in the aftermath of Japan's earthquake tragedy. Miners were particularly strong thanks to a rebound in commodity prices.

The FTSE added a further 22 points on Friday after Libya had supposedly declared a ceasefire in respect of the United Nations Security Council's vote to establish a no fly-zone. Consequently the oil price dropped in response to this seemingly positive piece of news.

There was no time for losers on Monday as the FTSE continued its upward assault, this time up 67 points to 5786.

Two reactors at the Fukushima nuclear power plant in Japan were successfully brought into cold shut down at the weekend while a significant telecoms deal in the US from AT&T towards Deutsche Telecom's US operations started to whet investors' appetite of further M&A deals later down the line.

Yesterday, the FTSE went into retreat, off a modest 23 points following disappointing inflation data, running at 4.4 per cent, 0.2 per cent higher than consensus forecasts.

As stated last week, the FTSE recorded its first dead cross for 2011 on Monday 14 March, which is normally a bearish signal but has been prone to giving false impressions as it did in August last year, ahead of a strong market rally.

The market is still obsessed with the price of oil and the Middle east/North African crisis. If you take that into account and end of tax-year profit taking, if remains difficult to see the FTSE rally much further than 5900-5910. Otherwise expect support to come in at 5500.

Regus: Has expanded into seven new countries

Big mover: How you can profit

The best performing stock in the FTSE 350 since last Wednesday came from office rental business Regus (RGU), up 21.7 per cent to close at 116.5p yesterday.

On Monday Regus posted a full-year net profit of £1.5 million, down from £67 million a year earlier, due to its Latin American growth programme and restructuring charges. However, the company hiked the dividend for the year to 2.6p, up from 2.4p in 2009.

The company is looking to accommodate for more multi-nationals to use Regus's business centres, in which meetings and conference calls can be arranged in one of their meeting rooms, while its virtual products aid working from home, making firms become more adaptive towards flexible working.

Regus spent £69.7 million opening 125 business centres in seven new countries last year with a greater focus towards Latin America and South East Asia.

Regus has £191 million in net cash in the bank, almost one fifth of the value of the business, which will allow it to fund further expansion.

In the meantime, the current consensus is that Regus trades on a price to earnings ratio of 18.43 based on forecasts for 2011, which makes Regus seem up with events.

But should a market event or the shares drift back closer to 100p, then it may not be a bad place to start building a stake.

Keep an eye on…

Latin American silver and gold miner Hochschild Mining (HOC) ahead of its preliminary results on 29 March.

Back in January, the company stated that its full year production will be in line with expectations with 26.4 million silver equivalent ounces achieved in 2010 with an average realised price of $22.6 per ounce (and $1,266 for gold).

The production will drop to 22.5 million equivalent ounces in 2011 while it works on other projects, particularly in Peru to bring in potentially 10 million additional ounces of annual production aimed from 2014.

The £2.05 billion company has a $530 million (£325 million) cash pile to allow further exploration and drilling.

Given the outlook for silver looking as strong as ever, particularly if you subscribe to premier Canadian investment manager Eric Sprott's bullish view of the commodity, then Hochschild Mining's prospects should continue to bode well going forward.

Highlights from the FTSE 350 over the last week include:

• On Thursday, Heritage Oil (HOIL) soared 8.2 per cent to 313.5p on newspaper reports that it had received a letter expressing an interest to acquire the company for 425p a share from an Abu Dhabi based investor.

• On Friday, Salamander Energy (SMDR) jumped 11.8 per cent to 294.9p in anticipation of positive drilling news from its operations n Thailand.

• Soft drinks manufacturer Britvic (BVIC) picked up 2.7 per cent to 383.6p on rumours of a bid, possibly from alcoholic drinks giant Diageo (DGE). • Industrial engineer Weir Group (WEIR) added 4.4 per cent to 1708p on Monday after an upgrade from Credit Suisse.

• Regus (RGU) gained 18 per cent to 116.6p for reasons mentioned above while a degree of short-covering took place.

• Rank Group (RNK) yesterday soared 13.5 per cent to 147p after it received £74.8m from HMRC as it overpaid on its bingo revenues, with more to come in interest payments.

• Soco International (SIA), the south-east Asian oil explorer slipped 0.8 per cent to 361p despite bid rumours circling.