LONDON (ShareCast) - The shipping industry has been in the headlines recently as freight rates have plunged, but James Fisher's specialist expertise is in demand. Last week, Fisher unveiled a new five-year contract with BP Angola to provide export tanker support services off the coast of the West African country. Fisher will operate three anchor handling tugs, which it will charter, and provide diving services for the mooring operations. No financial details have been released but analysts have calculated that the contract is worth $30m (£19m). This means the contract is a good win and consensus earnings forecasts are likely to rise. The shares, which remain a buy, are trading on a December 2012 multiple of 11.3 times, falling to 10.3 in 2013. The prospective yield is 3%. The Sunday Telegraph´s Questor team says buy.

"The strong stock market rally since last summer has boosted most portfolios. But not all investors are happy. Surprisingly, medium-sized and smaller companies have not shared in the recovery. While the FTSE 100 Index of the largest UK companies is close to its level of six months ago, smaller companies have lagged this by more than 10% on average. Mid cap shares are little better. Why has this happened? The underperformance is particularly disappointing when December and January are traditionally the best months for smaller companies. The stock market recovery has been driven recently by the biggest companies – particularly pharmaceuticals, consumer staples, tobacco and oil & gas. By comparison, smaller companies are focused more on the struggling UK economy, without the same global opportunity for growth. Analysts’ bias to optimism is part of the explanation. A year ago, earnings growth forecasts for 2011 for the FTSE 250 group of mid cap shares averaged 17%, but the actual result was just 2%. Earnings expectations for 2012 have actually grown over the past 12 months – from 14% to 20% growth. That seems unrealistic, as profit margins in small and mid-cap companies are already stretched, near historic highs. Smaller companies may seem historically cheap now, but the risks are increasing. Even successful businesses could find funding for growth difficult. Investors need to be realistic, and set aside any emotional attachment to smaller companies," writes Colin McLean, managing director of SVM Asset Management, for the Financial Mail on Sunday.

Last week, Reckitt Benckiser´s chief executive, Rakesh Kapoor, unveiled the company´s “new strategy for continued outperformance,” along with a new vision and purpose. “Our vision is a world where people are healthier and live better. Our purpose is to make a difference by giving people innovative solutions for healthier lives and happier homes,” he said. The next billion consumers will be found in emerging economies where the middle class is growing fast. However, the move is slightly behind the curve. This focus on emerging markets has been Unilever’s strategy for a number of years. Spirits group Diageo has also deployed a similar plan. Growth looks likely to be pedestrian but the company remains a cash-generating machine. This week’s gains have closed the earnings multiple gap with Unilever. Reckitt shares are trading on a prospective 2012 multiple of 14.5 and Unilever is on 14.9. Although Reckitt’s management is top-notch, Unilever is further down the line with its move into these markets. There are also questions over how popular brands such as Airwick and Clearasil will be in fledgling economies. Questor now prefers Unilever and investors should use gains in the past week to sell Reckitt shares Questor says.

AB

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