Week in Review: Lean times face a struggling RSA

BG Group

BG Group, the gas exploration company, is well on course to meet its target of boosting production by a fifth this year. Gas is a favoured alternative to, and is enjoying faster sales growth than, oil and coal because its burning emits fewer greenhouse gases. BG has also tied up impressive contracts to sell natural gas in liquefied form, which is easier to transport. With the return of fuel prices to levels before the spike that accompanied the the Iraq war, earnings will fall again and the stock may drift, but BG is a long-term winner. Hold.

Ultraframe

Ultraframe is the UK's largest conservatory designer, selling 100,000 units a year. The heady days of conservatory building in the UK are long gone, and the market is maturing, if not mature. The future lies in the US, and the group does have plenty of margin improvement and market penetration to go for there. It is worth holding on.

Topps Tiles

Victoria Beckham shops at Topps Tiles, the tile and flooring retailer. It has arrived. Posh redid her bathroom for only £500, twice Topps's average purchase. These are not big-ticket spends that would suffer in an economic slide, it says. The company sticks to no more than 30 openings a year, and the management resists temptations to blow its £9m of cash in expanding too quickly. There is plenty of growth still to come. Buy.

Galen

Through some bold acquisitions, Galen has turned itself into a pure drugs group, and the sales and profit growth it can wring out of its women's healthcare products surprised the market again this week. But there are doubts over how long this growth might continue, threatened by cheap copycat competitors. This is not a long-term hold. Shareholders need to be ready to take profits.

Interserve

The private finance initiative went suddenly and devastatingly out of stock market fashion last summer, just as Interserve, the building and maintenance group which has been chasing PFI work, said the rest of its business was slowing. Things seem to be on a more even keel, but Interserve is a labour-intensive business doing relatively low-margin work, hiring out scaffolding, cleaning, providing electricians and removing asbestos. The share price seems fair. Hold.

Filtronic

Filtronic, which supplies components for base stations, is finding life tough. Telecoms groups have to get their debt down before they really turn on the investment taps, so demand for 3G systems is slow and prices are under pressure for earlier systems. The shares are not worth buying.

Robert Wiseman Dairies

Robert Wiseman Dairies, Scotland's main milk producer, has been expanding south, building dairies and tying up contracts with big super-markets to make up for the milk-float sales drop. But milk is a perilous business, prone to vicious price erosion through pressure from the super-markets Robert Wiseman is so enthusiastically cultivating. This balances the undoubted growth potential and the share price looks fair. Hold.

Diploma

Diploma used to be a distributor of all manner of electronic components and other industrial bits and pieces. Now it focuses on hi-tech electronics, the next-day delivery of seals used in hydraulic equipment, and laboratory supplies for biotech and drug companies. It is in the enviable position of having £30m in cash to spend on acquisitions, at which it has proved good. Buy.

Avon Rubber

Avon Rubber is designing a new gas mask for the US military, and there is the prospect of a big supply contract in a couple of years. Which is a godsend, since the group's other markets look flat or worse. It makes hoses and vibration absorbers for the highly competitive car market. Debt is high, cash is tight and the shares look high enough.

3i Group

If we are at the bottom of the bear market, then it is both the best of times and the worst of times for 3i Group, the venture capital giant. With public companies unable to take advantage of lowly valuations because of timid shareholders and crippling debts, 2003 and 2004 may turn out to be vintage years for private equity investment. It will take at least three years of steeled nerves to find out, but 3i could be in for a bumper harvest. Go on, have a punt.

Viridian

Investors who take the opportunity of buying shares in Viridian, the Northern Ireland electricity group, will be in line for a dividend representing 6 per cent of their investment this year. The group promises to raise the dividend by more than inflation for the next five years. After a strong run, the shares may not generate big capital gains, but they will be a sparky performer for those investors looking for income.

The above is a selection of recommendations from this week's daily investment columns