The Week In Review: A dark summer for Somerfield

It does not get any better for Somerfield, the poor cousin of the supermarket sector. Sales have been falling again, despite the good weather which has tempted people into picnics and barbecues; despite the distractions in its rivals, particular Safeway, and despite the efforts of John von Spreckelsen, the executive chairman.

It gets worse when you look more closely. Sales at the group's Kwik Save chain are sharply down because it cut back on cut-price deals luring people into the stores, yet there has been no compensating improvement in profitability.

The company says there will be further benefits from the refit programme at the core Somerfield chain (120 of the 591 stores have been redone) and it plans to sub-let space in stores. With net assets estimated at 200p a share, Somerfield is no sell, but until it finds how to unlock that value, it is unappealing to new share shoppers.

Serco

Whether you like it or not, Serco is going to play a big part in the Government's shake-up of the public sector. The company already provides a vast array of services for the state, from decomissioning nuclear weapons and running observatories, to inspecting schools and providing IT support in the health service. It is a potentially vast market and the length of contracts mean all this year's forecast turnover is guaranteed, as is 86 per cent of next year's. Buy.

Heywood Williams

Heywood Williams is one of the UK's biggest makers of PVC doors and windows, but has never managed to make the profits expected from its share of a £1.3bn-a-year market. The chairman has promised an overhaul, but Heywood is paying its dividend out of disposal proceeds and the 11 per cent yield suggests it will have to be cut. More pain seems inevitable. Avoid.

Cairn Energy

Britain's biggest independent oil and gas explorer is another of those groups that moved its focus of operations to the Indian subcontinent. It has sold some of its interests in the North Sea, where oil costs $10 a barrel to extract compared to $2 a barrel in Bangladesh. Cairn is at the riskier frontier of the stock market, but its management has a steady hand and a willingness to pay down debt to keep the stakes as low as possible. Worth a gamble.

ASK Central

It is just 10 years since the first ASK pizza restaurant opened in Haverstock Hill, north London, and the company now has 104 of the brand across the UK, plus a further 50 pasta restaurants under the Zizzi name it created four years ago. The company thinks that it can more than double the number without over-feeding the market. The shares look value for money. Buy.

John Laing

John Laing is now an investment company and project manager, specialising in private finance initiative projects in return for regular fees and an equity stake. There are government contracts worth between £4bn and £5bn a year up for grabs. By their nature, they are long term and should make for solid, steady returns, but there is an element of political risk. On a three- to five-year view, the shares are a buy.

Incepta

Incepta is owner of the Citigate brand, among the two or three biggest financial PR firms when it comes to advising on merger and acquisition activity, and an ambitious player in "marketing services" such as publicity stunts and telling businesses who to send what sort of junk mail. The stock looks like a good earner for the long-term investor.

Schroders

For the first time in four years, Schroders has managed to attract more money into its plethora of funds than cash flowing to rivals. One of the City's best-known investment houses, Schroders is boosting private investor funds and specialist areas such as hedge funds and overseas funds, which also come with higher fees. Hold.

Amlin

Amlin is the Lloyd's of London insurer that got the cream, having made the most of rising premium rates in the past couple of years. There are signs rates are softening in some areas, such as in aviation and war insurance, but Amlin is more broadly-based than most. The company has also been lucky, with no hurricanes, floods or other major catastrophes to claim on its funds. For a company this well capitalised, there is growth to come. Buy.

Axis-Shield

What's the prognosis for those long-suffering shareholders at Axis-Shield, which makes diagnostic tests and testing kits for doctors and medical laboratories? It's impossible to be sure if its £9.2m cash and the dramatic growth of its new blood test for homocysteine (a way of predicting heart disease) will see it through to profitability. The launch date for a new doctors' kit which combines while-u-wait blood tests for diabetes and bacterial infections has slipped a bit. Stay in the waiting room for now.

BBA

One half of BBA is an aviation services provider that cleans and refuels aircraft; the other is a materials manufacturer for products such as nappies, baby wipes and kitchen roll. Both sides were hit by the Iraq war, which cut flights and drove up the price of polypropylene, the chemical needed for its manufactured products. Now, if the US business environment and worldwide air travel continue to gain momentum, BBA's earnings could jet ahead. Hold.

Arena Leisure

Arena Leisure is a racecourse owner that decided to take a big bet on the media rights to British horse-racing. Attendance at its six racecourses is up, but attheraces does not seem to be impressing the City. The company owns a third share of attheraces, with BSkyB and Channel 4, and is spending heavily on a dedicated digital racing channel. Investors should wait for more evidence of success before buying.